A break-even analysis shows your lender that you know the point at which you will start making a profit. While the break-even analysis is primarily for businesses making or selling products, it can also be useful for service-type businesses. Be sure to include a break-even graph, and be able to explain i
This worksheet answers the question "What do you need the money for?" In other words, it shows all the purchases you will need to make in order to open your doors for business. I call this a "Day One" statement, because you'll need all of this stuff the first day of business. Make sure you have included everything; it is better to over-estimate what you will need so you don't come up short with your loan proceeds.
Your lender wants to know your budget - that is, what you expect to bring in and how much to expect to spend each month. Lenders want to know that you can follow a budget and that you will not over-spend. They also want to see how much you will need to pay your bills while your business is starting out (working capital), and how long it will take you to have a positive cash flow (bring in more money than you are spending). Sometimes this budget is called a "cash flow" statement. A typical budget worksheet should be carried through three years, so the lender can see how you expect to generate the cash to make your monthly loan payments.
Although this statement is usually complicated, at startup there isn't much to include. You might want to get help from a CPA for this one. The balance sheet shows the value of the assets you have purchased for startup, how much you owe to lenders and other creditors, and any initial investments you have made to get started. The date for this spreadsheet is the day you open the business.
After you have completed the monthly budget and gathered some other information, you should be able to complete a P&L or Income Statement projecting your income for the first year. This statement shows your profit for the year and how much tax you estimate having to pay.
Large businesses use Sources and Uses of Funds statements in their annual reports, but you can create a slightly different simple statement to show your lender Lenders exactly how much you need for startup and working capital (on-going cash needs), how much collateral you will be bringing to the business, and how much you need to borrow. In other words, how much you need and what do you need it for.