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Prepare Your Financials Now for Speedier Loan Approvals

In addition to your year-end business financials, there are a number of other documents that are needed for your SBA loan package as well. While preparing and collecting all the documents needed for a loan application may seem daunting, a Salt Creek loan advisor will work with you hand-in-hand to assist you in efficiently providing the documents needed. Our live dynamic checklists will keep you up-to-date on what you have submitted and was is still outstanding. This responsive communication will keep you informed where you stand in the loan process is the top priority of our loan process and your loan advisor.

Why prepare Year-End Business Financial Statements?

Your 2017 year-end profit and loss statement and balance sheet can provide us with an up to date analysis of how the business performed in 2017. This gives us a recent snapshot of the current health of the business providing us the information we need to get you the best possible rates and terms. Additionally, the Small Business Administration (SBA) requires us to have “interim” business financials dated within 120 days of your application, so on January 1, 2018, all SBA lenders will need financials that report results through Aug 31st. It’s also important to understand the distinction when SBA starts that “120 day clock,” which is when the lender submits the loan to the SBA, NOT when you submit your financials to the lender.

It’s important to remember that it takes time to collect the loan documents needed to analyze, approve and submit the loan to the SBA, so it is wise to submit financials that are dated within 60 days from the time they are submitted to lender. This additional time cushion will help you avoid having to provide a second set of “interim” financials. It’s our goal to minimize the amount work needed to complete the loan application and providing financials dated within 60 days helps us speed you through the loan process.

Do You Have Outside Business Interests?

Whether they are called “outside business interests” by FINRA, or “affiliates” by the SBA, we are often required to analyze the effect that a borrower’s other businesses might have on the global cash flow. While the SBA has numerous definitions of what constitutes an affiliate, it typically includes any business that a borrower (or guarantor) owns, or controls, more than 50%. If you do have affiliates that you file tax returns for, it’s smart to begin collecting the same financial documents that are needed on the borrowing entity.

What Other Documents Do We Need?

In addition to business financials mentioned above, there are additional documents that we use to determine the best rates and terms we can offer. Reach out to a Salt Creek Loan Advisor to learn more about the following items needed for SBA lending.

• Personal financial statements listing personal assets and liabilities
• Three years of personal tax returns
• Personal cash flow statement listing household expenses and income
• Three years of business tax returns (if you file a business return)
• Business debt schedule that outlines all existing business debt (not personal debt)
• Broker/Dealer or Custodian reports on AUM, GDC, client metrics, etc.

Other than the financial information listed above, we will also typically need:

• A list of collateral
• Any broker/dealer or custodian agreements
• Lease agreements for office space

Projections When Acquiring

If there is an acquisition taking place, we like to review two years of income and expense projections. This can be the most labor-intensive financial statement to produce, but it is also the most valuable to both you and us. By providing projections, you show us that you have done your due-diligence and analyzed what the combined revenue and expenses will be post-acquisition.

Practice acquisition has built-in cash flow, but it is important to know how much will be available to service debt. Creating projections will provide you with the estimated cash flow needed to service the debt, but that is not all. Taking the time to make projections will help you anticipate what the combined operations will look like from an expense standpoint and give you the opportunity to address the questions that that raises. For example, can the combined practice handle a 20% reduction in revenues? Your projections will help answer that question.

Additional Information For Buying A Practice

If you are applying for a Salt Creek loan to purchase a financial advisor practice, we need many of the same historical financials that we review on your practice. Typically this includes three years of historical financials as well as current year-to-date financials. Along with financials, we need a copy of the buy-sell agreement and any corresponding agreements, such as consulting agreements, non-compete agreements, seller-notes, etc.