Profit & loss Statement is one of the important factor when applying for a business loan. It is not only helpful for analytical purposes, but also signifies investors that your business has strong and feasible operations.
P&L statements along with future projections and historical business data are must things for a business loan approval. Small businesses tend to have high risk for lenders, so they need much more than a business plan to get you approved for a business loan. These documents shed light on the integrity of your business and your data, and improve chances of getting a small business loan.
As a matter of fact, P&L statement along with a perfect credit history, a strategic business & marketing plan and a strong personal resume are among the essential requirements for a small business loan approval.
Here are five things you can do to make your P$L Statement rock-solid and improve your chances of getting a loan you need:
- P&L Statement Impact On Business
A P&L statement of a business is the review of a business earnings and losses incurred during a period of time. In essence, its business revenue excluding business expenses incurred such as cost of goods sold, overheads, bad debts, operating expenses and depreciation.
In addition to business profitability, your P&L statement must also give details how much you money you to pay off your workforce, clear debts, and support growth. In a nutshell, a P&L Statement is the statement of your business performance in financial terms.
- Available Tools Can Help
Creating a perfect P&L statement isn’t the easiest thing to do. There are many online tools available to help you get started like SCORE’s profit and loss statement templates. Score’s P&L statements templates contains all the needed calculations to anticipate business net profit. To make the process more efficient and ensure the reliability of your data, you can use cloud accounting tools as well. Cloud accounting tools automatically feed in data from other reports, and remove the headache of manual data entry, synchronization and protection.
- Set Goals & Measure Them Accordingly
You need to set profitability goals like how much profit you want to make this quarter. Use your P&L statement to track your business performance against the profit goals set and use the same data to gather insights about your business performance. For instance, if earnings are down, do something in marketing perspective to increase sales and boost performance. And, if expenses are up, take action and plan accordingly.
- Set Your Business Projections
Every business lender is interested in a business’ one year projections for future profits and losses. They require a solid business plan detailing business concept, marketplace and financial and how a business intends to earn. However, 3 years time is ideal because it demonstrates the impact of external financing on business earnings.
- Evaluate Performance Repeatedly
After all set, it’s time to review your P&L statement repeatedly on monthly basis. Keeping checking everything is a great way to stay focus and make needed changes to your business planning. You can take help from a financial expert to monitor your financial performance; and its benefit will offset the fees incurred. There are many factors to consider in review process. There might be increased sales with declining profit. The costs can be elevated. Look for growth prospect in new markets and search for ways to keep overheads low by shopping around. Why your cost of goods sold increases. Find out and take action accordingly.
You will find thousands of traditional lenders on virtually every American corner street. As a matter of fact, when a business thinks of getting a business loan, mortgages and alike, banking institutions are usually first things in mind. But there are alternative lenders, like Merchant Advisors, as well. They all are there to help small businesses like yours to grow and prosper.
Well, the final decision is yours to take because it’s your small business. Do research properly, identify your requirements and ensure you’ve met all the business loan requirements to support your business growth.