When you apply for a business loan, the bank wants to understand the financial position of your business. A balance sheet is one of the clearest ways to show that.
What a balance sheet shows
A balance sheet is a snapshot of what your business owns and owes at a point in time. Alongside a profit and loss statement, it gives the bank a picture of stability and capacity to repay.
- Assets: what the business owns.
- Liabilities: what the business owes.
- Capital: the owner's stake in the business.
Preparing one that holds up
Banks expect statements that are consistent with your other records. Accurate, well-organised figures, reviewed before submission, make the application smoother and reduce back-and-forth.