A lender will require a pro forma set of financials from a business which does not yet have income from operations and tax returns in order to identify the sources and uses of funds available for working capital, to get the business owner’s estimate, again with assumptions, of the anticipated balance sheet of the business over time.
Approaching A Commercial Lender Business Plan and Financial Estimates
In addition to an actual loan application (and, often, a personal financial statement from the business owner), a commercial lender will ask to see both a business plan and estimated financial projections for the business. There are innumerable examples and templates for business plans available in print and online. Most of these are really operational plan templates and –while useful to the business owner for planning and benchmarking –are really over long for use in making a loan application. What a potential lender wants to see is a detailed but succinct statement of the facts about the business, its markets, its activities to engage in business, its financial situation, and its loan request. These elements are most easily shown by illustrative example. Example THE BUSINESS: Blue Sky Child Care, LLC is a Minnesota Limited Liability Company, formed on January 15, 2016, and licensed by the Minnesota Department of Human Services on January 10, 2017 to offer licensed family child care at the premises located 1234 Easy Street, Town of Big Acre, Long Lake County, Minnesota. These premises are the residence of the owner and loan applicant John M. Smith. Since its formation, the business’ efforts have been devoted to securing licensure; purchasing fixtures, furniture, and equipment; and hiring staff for delivery of services. The business anticipates opening on June 1, 2017 and has statements of intent from 8 parents for placement of 8 children of its licensed capacity of 10 children.
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