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How to Properly Complete Your Personal Financial Statement

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Paul BosleyPaul Bosley

Preparation when launching a new privately held business or a franchise is key to the success in securing the financing needed to properly capitalize a new business enterprise. The following article describes Video #2 of our three-part series that outlines a key step to prepare for financing a new business.

In Video #2, entitled How to Properly Complete Your Personal Financial Statement, we review how to properly complete this important form, which is required by all SBA loans and most lease applications for amounts in excess of $50K. The personal financial statement provides a lender with a snapshot of an applicant's assets, liabilities, net worth and family income on a specific date. Over many years of processing loan and lease applications, I estimate that a significant percentage of these forms are submitted to me with errors. In speaking with my colleagues who work at various lenders, they echo this fact, so it is important that applicants learn how to properly complete their personal financial statement.

The key concepts of the video are as follows:

  • Date - List the date for the document. All dollar amounts entered are based upon this date.
  • Married Couples - This is a joint form for all married people, so both spouses sign the form even if only one of the spouses is requesting the financing. Both spouse names should be on top of Page #1, and both spouses sign at the bottom of Page #3.
  • Liquid Assets - A typical lender will consider personal and business checking and savings accounts, marketable securities and retirement accounts from a previous employer liquid asset since the money can be liquidated and available in cash in a short period of time, if needed.
  • Life Insurance - The only dollar value that can be entered into this column is the cash value of a whole life insurance policy since the funds are available in a short period of time, if needed.
  • Real Estate - The current estimated value of all real estate owned. If a percentage is owned in an investment property, enter the real estate value X the percentage owned.
  • Automobiles - The current estimated value of all automobiles owned.
  • Other Property - Any tangible assets owned with some value, such antiques, jewelry, etc. These assets are listed in Section 5 on Page #2.
  • Other Assets - The current value of Shareholder's Equity on the most recent balance sheet for an existing company. For a startup business, list any significant investment(s) made to launch the business, such as franchise fees or security deposits. These assets are listed in Section 5 on Page #2.
  • Total Assets = Total Liabilities and Net Worth, so both Totals should be the same dollar amount.
  • Accounts Payable - List money owed if operating a business as a sole proprietor.
  • Installment Auto - The total outstanding owed on auto loans and the monthly payment.
  • Loans Against Life Insurance - Loans taken against a whole life insurance policy.
  • Mortgages on Real Estate - The current amount owed for all real estate owned. If a percentage is owned in an investment property, enter the percentage of the mortgage owed.
  • Net Worth = Total Assets – Total Liabilities. This is one of the most important dollar amounts viewed by most lenders.
  • Section #1 - Sources of Income - List the sources of all income on an annualized basis. Lenders look closely at this section to evaluate if the applicant(s) have secondary sources of income. If married, include income from both spouses.

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In Video #3, entitled How to Properly Complete the Sources and Uses of Funds Form, we will review the proper completion of the sources and uses of funds form. This form is required by many SBA lenders because it lists the dollar amount anticipated to be spent, including organizational costs, franchise fee (if any), construction costs including a percentage contingency for cost overruns, equipment, closing costs and working capital. It also lists where the money is coming from, including the owner(s) equity injection, gift letters, money being transferred from retirement accounts and debt financing.

For more information, contact Paul Bosley at (800) 788 - 3884 or or visit

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