How to Do Your Business Loan Accounting

Basics for successfully managing your business loan include a sound understanding of accounting. These include careful review of your business financial statement, cash flow accounting and any cash flow loan. Here are some points to consider.

Business Plan Financial Requirements


Probably the most important part of your request to obtain a business loan is your business plan. This is a comprehensive look at your business, what the strengths of the business are, the management composition, marketing and, most important, the financials. The Small Business Administration (SBA) offers step-by-step guidance in writing a business plan (www.sba.gov/) and is a great resource for business owners. The finance portion of the business plan includes the following sections.

  • Loan applications
  • Capital equipment and supply list
  • Balance sheet (what you have coming in or income, and what's going out or expenses)
  • Breakeven analysis (when you will be profitable)
  • Pro-forma income projections (Profit and Loss statements)
  • Three-year summary
  • First year with detail by month
  • Second and third years with detail by quarters
  • Assumptions (upon which you made your projections)
  • Pro-forma cash flow

What You Need in Your Financial Management

In order for your lender to consider your request for a business loan, your financial management must be sound. In your request for a cash flow loan, the lender needs to be assured that you are thoroughly invested in your business. They'll want to know the amount of any initial equity capital and the source of your funding. You, or your accountant or CPA, will need to develop a monthly operating budget for the first year, as well as an expected return on investment and first-year monthly cash flow. Prepare balance sheets and projected income statements for a two-year period.

Your breakeven point must be mentioned, along with detail of your personal compensation and balance sheet. Who will do your accounting and how will your accounting methods be maintained? This also must be detailed. What-if scenarios on negative situations or potential difficulties - and the means to address them - must also be included.

Hire the Best Accountant


Your business depends on capital to grow. Without your business loan, you may not see the growth you strive for. Why take a chance with the key measurement of financials? Hire the best accountant you can, or keep the one you have, as long as he or she has a proven track record and impeccable credentials. After all, if your business gets into financial difficulties, your choice of accountant may be one of your most important business decisions.