A small business loan can be very helpful in helping a Los Angeles-based company weather a rough patch or expand during a period of sustained prosperity. However, a financial institution’s decision to approve or decline such a loan will be dependent a number of factors that an owner simply can’t control. One surefire way to improve your chances of getting a loan is to ensure that your profit and loss statement is as airtight as possible.
Create A Robust Projection Report
When deciding whether or not your company meets the criteria for a loan, a lender will take particular interest in the projected earnings section of in a small business’s P&L statement. As such, you should do as the Small Business Administration recommends and fill out that section of the document with information pertaining not only to your forecasted profits and losses but also how you plan on hitting your revenue benchmarks. Include details about your upcoming marketing initiatives and how you plan on reducing your ongoing expenses. Those specifics can mean the difference between a yes and no.
Review Your Company’s P&L Regularly
Due to the daily responsibilities involved in operating a small business, owners don’t have a lot of time to spend reviewing their financials. While that tendency is understandable, founders should make it a point to go through their P&L statements regularly. Doing so will help you identify ways you can improve your business’s profitability by areas of opportunity in your costs of goods, overhead or staffing. It can also give you critical insights into the effectiveness of your pricing strategies. Optimizing your income with only boost your chance of getting a small business loan.
Use Professional Accounting Software
While small business owners are known for having passion, ingenuity and tenacity, they typically don’t start out with a great deal of accounting knowledge. As such, owners would be wise to create their P&L statements with quality accounting software. Using a program like QuickBooks or SCORE’s free 12-month profit and loss Excel template will make the accounting process easy and will allow you to generate reliable and professionally formatted documents.
The foregoing information is provided by City National Bank (CNB). Unless otherwise stated, opinions expressed are those of the respective authors and not necessarily those of CNB. The information is provided without warranty and no recommendation or endorsement by CNB is intended or should be inferred unless specifically stated.
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