You have prepared the necessary thing needed to start your small business, you already started your online promotion to gain visibility. In fact, because you don’t want to restrict the business to online alone, you already got a perfect location to start. However, there is one pertinent thing you are missing, the financial document for your business. Although the business has not yet started, this does not mean that it cannot have a financial statement. It is important to note that the financial documents you will need will be based on what your lender or bank requested. Below is a list of the necessary financial documents.
Financial Statements You Will Need
- A start-up budget for your business (preferably for a period of one year)
- A worksheet displaying your startup costs
- A document on the plausible profit and loss
- A plausible balance sheet document
Depending on the financial institution you are using to fund the business, your lender might request these two additional documents
- Break-even analysis
- How you intend to source and use funds.
Why Lenders Ask for these Documents
The intent of these document is to ensure that all the necessary financial aspect of your business is properly taken care of. Also, beyond providing these documents to the financial institution in charge of your business, it gives you an insight into what to expect from your business and the amount it will cost to run the business. The financial documents act as a financial plan for your business. It also gives you an insight into the challenges that could make you run a loss. The financial document gives both you and the moneylender an insight into the profitability of the business.
In addition to this, one of the reasons lenders often ask for these documents is to know your budget and see if there is any likelihood of overspending. They also want to know the average amount you need to run the business. Though the documents are guessworks, they provide an insight into the overall financial performance of the business.
Noteworthy that before you submit any of the required documents, check the content. Ensure there are no mistakes and if there are any, correct them immediately. Let your document be as clear and understandable as possible.
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