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Business Loan Sample Application - Page 4

Annual Interest Expense
Each payment that you make for loans that you currently have out on your business name has both a principal and an interest component.  The total interest paid by you on all business debt for the entire year is what the lender is interested in finding out and that is what you will have to put down here.

Annual Depreciation
Business fixed assets like computers, plant, machinery etc all have a certain annual depreciation that a business is allowed to write off.  The Internal Revenue Service understands that every asset employed by the business will depreciate and lose value and thus it gives the business the ability to write off that annual depreciation expense from its income and expense statement thereby reducing the net profit of the business and it’s subsequent tax liability.  However, this depreciation expense is not a real cash outflow to the day to day operations of the business and lenders of course know that – they tend to add back the annual deprecation that a business owner claims on the fixed asset of a business to arrive at the true profitability, cash flow and debt service coverage dollars available when they are looking at business loan applications.  If you are not sure about this number make sure you consult with your certified public accountant (CPA.)

Current Liabilities
The day to day expenses that a business has to pay in the near future is what this refers to.  Typically all bills that are due in less than one year are considered to be current liabilities.

Total Debt
The total business loans that the business is responsible for is what the lender is interested in finding out about in this section of the business loan application.

Business Assets
Assets of the business like accounts receivable, inventory, real estate, fixed assets, equipment and liquid assets like cash and securities are all a part of the total assets base of a business.  Always consult with your certified public accountant (CPA) before you put this number down.

What is your fiscal year end? 
This refers to the date when you business ends it’s fiscal year.  In the case of some business entities like S-corporations this will be the end of the calendar year but in the case of other entities like a C-corporation the business entity may elect a different fiscal year end.  Please check with your certified public accountant (CPA) if you are not sure.

Is the company in good standing with the Secretary of State? 
The Secretary of State is the government office of the State in which the business entity is incorporated.  This office is what gives a business entity its right to exist and the Secretary of State (varies by State) works close with the State tax authorities to make sure that you have been paying the State government taxes due every year.  If you have not filed state taxes for more than three years the Secretary of State will qualify your business entity as being inactive.  This is certainly not good when you are applying for a business loan and hence the business owner must take care to see that they are in good standing with their respective Secretary’s of State.  A certificate of good standing can be requested by the business owner from the Secretary of State and we recommend that this be submitted along with the loan package.  In the case of a new business or unincorporated entity this document would not be applicable.

Existing balances on all other business lines of credit & business credit cards
Here you have to put in the current debt outstanding with other financial institutions and credit cards.  Something to keep in mind, is that unless your business lines of credit and business credit cards are being reported to your personal credit bureau there is probably no way for the new lender to know that you have them out there.  Business debt is typically not reported to Dun & Bradstreet and you may want to check out you business bureau to see what does and what does not show up.

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