2. BUSINESS FINANCIAL INFORMATION

Existing Bank Name & Number 
The name of your existing bank where you have your business accounts is what goes in here – in the event you do not have a business account you should leave this area blank but make sure you check with your business banker.

Loan or deposit account information
In the event you have a business loan currently the lender typically likes to see how you have been doing with the repayment of that loan and will ask you information about that loan including the account number, the balance of the loan, the monthly payment and the also if you would like to payoff this existing loan with the proceeds of the new loan for which you are filing out an application.

Gross Annual Income
For existing businesses this would be the actual top lines sales number that you report on your business.  The bank may require this for two to three years on business loan applications.

Business Net Income
The net profit after taxes is what this number refers to, please check with your certified public accountant if you are not sure about this figure.

Number of Employees
Simply put down the total employees you have working for your business; even if your employees are part-time we highly recommend that you put them down in this listing.

Cash Balance
This refers to the amount of cash you have in hand in your checking, savings and money market accounts.

Monthly Debt Payments
How much do you pay on all the business debts that you have outstanding – calculate the sum of all these monthly debt payments and put it down here.

Annual Interest Expense
Each payment that you make for loans that you currently have out on your business name has both a principal and an interest component.  The total interest paid by you on all business debt for the entire year is what the lender is interested in finding out and that is what you will have to put down here.

Annual Depreciation
Business fixed assets like computers, plant, machinery etc all have a certain annual depreciation that a business is allowed to write off.  The Internal Revenue Service understands that every asset employed by the business will depreciate and lose value and thus it gives the business the ability to write off that annual depreciation expense from its income and expense statement thereby reducing the net profit of the business and it’s subsequent tax liability.  However, this depreciation expense is not a real cash outflow to the day to day operations of the business and lenders of course know that – they tend to add back the annual deprecation that a business owner claims on the fixed asset of a business to arrive at the true profitability, cash flow and debt service coverage dollars available when they are looking at business loan applications.  If you are not sure about this number make sure you consult with your certified public accountant (CPA.)

Current Liabilities
The day to day expenses that a business has to pay in the near future is what this refers to.  Typically all bills that are due in less than one year are considered to be current liabilities.

Total Debt
The total business loans that the business is responsible for is what the lender is interested in finding out about in this section of the business loan application.

Business Assets
Assets of the business like accounts receivable, inventory, real estate, fixed assets, equipment and liquid assets like cash and securities are all a part of the total assets base of a business.  Always consult with your certified public accountant (CPA) before you put this number down.

What is your fiscal year end? 
This refers to the date when you business ends it’s fiscal year.  In the case of some business entities like S-corporations this will be the end of the calendar year but in the case of other entities like a C-corporation the business entity may elect a different fiscal year end.  Please check with your certified public accountant (CPA) if you are not sure.

Is the company in good standing with the Secretary of State? 
The Secretary of State is the government office of the State in which the business entity is incorporated.  This office is what gives a business entity its right to exist and the Secretary of State (varies by State) works close with the State tax authorities to make sure that you have been paying the State government taxes due every year.  If you have not filed state taxes for more than three years the Secretary of State will qualify your business entity as being inactive.  This is certainly not good when you are applying for a business loan and hence the business owner must take care to see that they are in good standing with their respective Secretary’s of State.  A certificate of good standing can be requested by the business owner from the Secretary of State and we recommend that this be submitted along with the loan package.  In the case of a new business or unincorporated entity this document would not be applicable.

Existing balances on all other business lines of credit & business credit cards
Here you have to put in the current debt outstanding with other financial institutions and credit cards.  Something to keep in mind, is that unless your business lines of credit and business credit cards are being reported to your personal credit bureau there is probably no way for the new lender to know that you have them out there.  Business debt is typically not reported to Dun & Bradstreet and you may want to check out you business bureau to see what does and what does not show up.

Total balances in all business checking & savings accounts and other business loans and equipment financing
Clearly, the lender is looking to understand exactly what your business credit and deposit relationships are and you will have to provide them with this data.  Many times a lender looking to extend you credit may check with one of your lenders to make sure that you have a good payment record and you do have the funds that you are claiming in your application.

Number of checking & savings accounts currently open at other institutions 
Here you would put in the amount of total accounts open at other banks.  Established businesses tend to have multiple banking relationships.

Do you wish to pledge you accounts receivables, inventory or equipment owned as collateral? 
Collateral is one of the Five C’s of lending and banks are always more sanguine about lending when they see that they have a safety net by which they may recover all or some of their proceeds in the event the business falters.  In loans larger than $100,000 (microcap loans), banks tend to require collateral.  The amount of collateral depends from lender to lender.  Many times business owners will pledge the accounts receivable, inventory and / or equipment as collateral.  SBA loans tend to require additional collateral and will often require the business owner to put up all business assets and their personal residence as collateral.

Amount of credit line / loan requested? 
Here of course the business owner / partner will put down the total loan amount that they are applying for.  We always recommend that you make an effort to understand what the maximum loan limits are of the lender that you are applying to and try and work within that limit.  For example many lenders do not require documentation for lines of credit of up to $100,000; thus if the business needs $150,000, we recommend that it approach two lenders and apply to each of them for a loan of $75,000 – this enables the bank to lend below it’s maximum allowed lending limits and give the application a better chance of being approved.  As always check with your Business Banker to get a clearer idea of the bank’s current lending practices.

Purpose of the loan
What are you going to do with the money? – This is the question that the lenders are looking to get an answer to.  If the use is for general purpose working capital then say that; if you are looking to buy furniture, office equipment of other items then add that in here as well.  For a new business, there may be multiple uses of the proceeds and we encourage that the applicants list all they can in the business loan application.