If this sounds like you

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Scenario · Personal financial statement for a lender

Personal financial statement for a credit-line increase

A personal financial statement is a signed, dated snapshot of your assets, your debts, your yearly income and any business loans you’ve guaranteed. Here is how we build one for a lender, shown on a made-up business owner asking for a bigger credit line. Your situation will be different, but the steps are the same.

If this sounds like you

Your lender asked for a “personal financial statement,” and you’re not sure what goes on it.
You personally guarantee a business loan or credit line.
The lender’s analyst came back with questions about a number on your statements.
You’ve filled one out before and can’t remember what you put on it.
You’re about to ask for a bigger line, a new lender or better terms.

If any of these sound like you, the next section shows how we would work with you. After that comes a full example, with the filled-in statement and the analyst’s questions.

We work out your options from your own books and tax returns.

Your numbers will be different. On the call we work them out with you.

Personal credit, taxes, finances
Books
Controller
CFO, including tax planning

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How we'd work with you

Here is what happens in the first week, the first 30 days and each time the lender asks again.

Week 1: gather and list

Get the lender’s checklist and the lender’s own statement form.
Every lender’s form is a little different.
Pull your statements.
That means bank, brokerage and retirement accounts; home and real estate values and mortgages; car loans and leases; credit cards; other loans; and what you own in each business.
Pull the business statements the lender will see next to yours.

First 30 days: build, check and send

Fill in the statement from documents, with a schedule behind each line.
Make sure your business value and income match the business statements and tax returns.
Get ready for the analyst.
The questions we see most are inventory unit counts against the lender’s report, negative bank balances, legal names and entity type, so we have the documents for each one ready.
Go over it with you, send it to the lender once you sign, then answer the analyst’s questions in writing.

After that

Each quarter, update the schedules.
The next request then takes a day.
Before any new lender request, we update the statement and put a new date on it, and you sign it again.
At year end, line the statement up with the new tax returns.

What you get

A statement you can sign with confidence.
A lender package where every page shows the same numbers.
Quick answers when the analyst calls.
A personal balance sheet you can use for your own planning, too.

Meet the owners and the request

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Owner A owns Sample Auto Sales LLC, a made-up used-car dealer taxed as an S corporation. Owner A and Spouse A sign the guarantee. The dealer has a $500,000 credit line with Lender A that pays for inventory. The dealer wants to raise the line to $750,000. Everything here is invented: the people, the lender and every number.

Current line

$500,000

with Lender A

Requested line

$750,000

for more inventory

Guarantors

Owner A and Spouse A

Net worth on the statement

$1,831,000

assets minus liabilities

The lender’s checklist

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Every lender has its own list. This one is typical for a credit-line increase.

What the lender asked for	Who provides it	Status
Business statements, year to date	Sample Auto Sales (we prepare them)	Sent, then corrected once
Business statements, last two year ends	Sample Auto Sales	Sent
Business tax returns, last two years	Sample Auto Sales	Sent
Personal tax returns, last two years	Owner A and Spouse A	Sent
Bank statements, last three months	Sample Auto Sales	Sent
What other lenders are owed	Sample Auto Sales (a debt schedule)	Sent
Sales by month, last 12 months	Sample Auto Sales	Sent
Personal financial statement for each guarantor	Owner A and Spouse A (we build it)	One joint statement, signed by both and sent
Signed consent for tax transcripts	Owner A and Spouse A	Signed on the lender’s form

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The statement, filled in

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This is the personal financial statement built from documents. Every line has a schedule behind it.

Lender A took one joint statement signed by both spouses. Some lenders want one for each guarantor, so we ask first.

What you own

Asset	Amount	Where the number comes from
Cash in banks	$85,000	Schedule 1: three bank accounts
Brokerage account	$140,000	Schedule 2: last statement
Retirement accounts	$310,000	Schedule 3: two accounts
Home	$650,000	Schedule 4: recent appraisal
Rental condo	$280,000	Schedule 4: county value
Ownership in Sample Auto Sales LLC (100%)	$900,000	Schedule 5: equity on the business balance sheet
Vehicles owned (two)	$45,000	Schedule 6: owned only; the leased car is left off
Money others owe you	$20,000	Schedule 7: a signed note from a relative
Total assets	$2,430,000

What you owe

Liability	Amount	Where the number comes from
Home mortgage	$380,000	Schedule 4: lender statement
Rental condo mortgage	$170,000	Schedule 4: lender statement
Car loan	$18,000	Schedule 6: lender statement
Credit cards	$9,000	Schedule 8: balances on the statement date
Taxes owed (balance due on last year’s return)	$22,000	Last year’s Form 1040
Total liabilities	$599,000

Net worth

Total assets of $2,430,000 minus total liabilities of $599,000 leaves a net worth of $1,831,000.

Income and yearly costs

Line	Amount a year	Where it shows
Owner A salary from Sample Auto Sales	$120,000	Form W-2 from the company
Owner A distributions from Sample Auto Sales	$150,000	Schedule K-1 (the profit behind them is on Schedule E)
Spouse A salary	$70,000	Form W-2 from an employer
Rental condo, net	$18,000	Schedule E
Home and rental mortgage payments	$51,000	Lender statements
Car loan and card payments	$14,000	Statements
Income taxes paid	$68,000	Personal return and estimates

Guarantees you have signed

Loan	Limit	Balance today	Who pays it
Sample Auto Sales credit line, Lender A	$500,000	$410,000	The business
Sample Auto Sales shop equipment loan	$60,000	$36,000	The business

Guarantees are listed even though the business pays them. A lender wants to see every loan you could be asked to cover.

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Schedules behind each line

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Here are four of the short lists behind the statement: cash, real estate, business ownership and vehicles. Updating them each quarter is what makes the next request quick.

Schedule 1: cash

Account	Statement date balance
Bank 1 checking	$32,000
Bank 1 savings	$41,000
Bank 2 checking	$12,000
Total	$85,000

Schedule 4: real estate

Property	Value	How valued	Mortgage	Equity
Home	$650,000	Appraisal from the last refinance	$380,000	$270,000
Rental condo	$280,000	County appraisal	$170,000	$110,000

Schedule 5: business ownership

Business	Share	How valued	Value
Sample Auto Sales LLC	100%	Owner equity on the corrected year-to-date balance sheet	$900,000

Schedule 6: vehicles

Vehicle	Owned or leased	Value	Loan
Pickup	Owned	$28,000	$18,000
Sedan	Owned	$17,000	$0
SUV	Leased	Not listed	Lease payments only

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Every page shows the same numbers

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Before anything goes to the lender, we check each line against its source, the business statements and the tax returns.

Statement line	Source document	Business statements	Tax return	Match
Ownership in Sample Auto Sales	Corrected balance sheet	Owner equity $900,000	Last year’s return (Schedule L, the balance sheet page) matches the year-end books. This year’s profit, minus distributions, brings equity to the corrected $900,000	Yes
Owner A salary	Form W-2	Officer wages $120,000	Form 1120-S officer pay $120,000	Yes
Owner A distributions	Bank transfers	Distributions $150,000	Schedule K-1 distributions $150,000	Yes
Rental condo income	Lease and bank deposits	Not part of the business	Schedule E $18,000 net	Yes
Taxes owed	Last year’s Form 1040	Not part of the business	Balance due $22,000	Yes
Guarantee on the credit line	Loan agreement	Line balance $410,000	Not on the return	Yes

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The analyst’s questions

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Lender A’s analyst sent these questions. We answered each one in writing, with the document that backs it up.

Question	Answer	Document sent
Inventory on the balance sheet is higher than our unit report.	Two vehicles sold last month were still on the balance sheet. We moved their cost to cost of sales, and inventory now matches your report.	Corrected balance sheet and the unit list
The name on the application differs from the state record.	The application left off “LLC.” The legal name is Sample Auto Sales LLC.	Corrected application and the state filing
Is the business an LLC or an S corporation?	It is an LLC that elected to be taxed as an S corporation.	The IRS acceptance letter for the election
Distributions are higher than this year’s profit.	Part of the distributions paid last year’s tax on business income.	Distribution schedule by month
The bank account shows a negative balance at month end.	The negative balance came from checks that were written but hadn’t cleared the bank yet. They are now shown as bills owed.	Bank reconciliation
Taxes owed on the statement don’t show on the business return.	They are personal taxes from Owner A’s Form 1040.	Page 2 of the personal return
Do the transcripts match the returns you sent?	Yes. The lender pulled them with the signed consent.	None needed

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From request to approval, then one update

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Week 0: Lender A sends the checklist and its own personal financial statement form.
Weeks 1–2: We gather the documents and build the statement and its schedules.
Week 3: The package goes in, signed by Owner A and Spouse A.
Week 4: The analyst sends seven questions.
Week 5: We send the corrected balance sheet and written answers. The business value on the statement is updated, and both owners sign it again.
Week 7: The line goes to $750,000.
After the tax returns are filed: Lender A asks for an update for its yearly review. The schedules are current, so the new statement, lined up with the new returns, is dated and signed in a day.

The fix we made to the business books

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Move sold vehicles to cost of sales

Two vehicles sold the month before were still on the balance sheet as inventory. This entry fixed the year-to-date balance sheet. The business value on the statement was set from the corrected numbers.

Account	Debit	Credit
Cost of vehicles sold	$54,000
Vehicle inventory		$54,000
Total	$54,000	$54,000

A personal financial statement has no journal entries of its own. The fixes happen in the business books, and the statement follows them.

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Tax and lender questions we raise

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Salary or distributions? If you work in your S corporation, the IRS expects a reasonable wage paid through payroll before distributions. Your wage shows on your return as W-2 pay. Your share of the company’s profit shows on Schedule E, whether or not you take it out as distributions.
How business income reaches your return. Your share of S corporation or partnership income comes to you on Schedule K-1 and goes on Schedule E of your Form 1040.
Taxes you owe. A balance due on last year’s personal return belongs on the statement as a liability.
Tax transcripts. Many lenders get your transcripts from the IRS with your signed consent on Form 4506-C. You can see the same transcripts yourself in your IRS Individual Online Account. Your numbers should match them.
Entity type. Give the lender one clear answer, backed by the IRS letter that accepted your election.
Legal name. The name on the lender’s papers has to match the state filing exactly.
SBA loans. For an SBA loan, the lender may use SBA Form 413, the SBA’s own personal financial statement. It is on sba.gov.

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What we'd ask you for

This is the list we start from. We only read these documents. Nothing goes to the lender until you sign.

What we ask for	What we look at	What it tells us
The lender’s checklist and form	Every item and the form’s own lines	What this lender wants and in what shape
Bank, brokerage and retirement statements	Balances on one statement date	Cash and investments
Mortgage, car loan and card statements	Balances and monthly payments	What you owe and what it costs each month
Home and real estate values	Appraisal or county value	What your property is worth
Business statements	Year to date and the last two year ends	Your business value and income
Personal and business tax returns	The last two years	Income the IRS already has, and any tax owed
Loan and guarantee papers	Every loan you have signed for	Guarantees to list

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Check your personal finances first

Before you sign a statement for a lender, walk through your personal finances one question at a time.

Check your personal finances

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See how a dealer’s books are kept

Lenders read your business statements next to your personal financial statement. The dealer page, which uses a different made-up dealer, shows the monthly close and floorplan tie-outs that keep a dealer’s statements right.

See the dealer accounting software example

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Need a personal financial statement for your lender? Book a free 30-minute call about your credit-line request. We’ll go over the lender’s checklist with you and tell you what we would pull first.

Book a free 30-minute call

Bring the lender’s checklist and the last personal financial statement you signed, if you have one.