Projection of Balance Sheet

The Projection of a balance sheet when applying for a loan can be a daunting experience but it is not really hard to do. First, do you have an Existing Balance Sheet to work with or are we talking about Creating your Balance Sheet from Scratch?

Existing or New Balance Sheet 
The Existing or New Balance Sheet is very easy to do when applying for a loan and Projecting the balance sheet after the loan is made. First, if you are putting in cash you must subtract or Credit (Debits and Credits are shown only because on the bank SBA form you need to enter by debit or credit on the SBA form.) your Cash. Then you want to put into the Assets what you are buying with the Loan and put into Liabilities what you are borrowing with the Loan.

Lets say that you have a Total Project Cost of  $1,000,000. This amount is going to be spent on Real Estate of $500,000.   Equipment of $400,000.  Inventory $95,000, Fees of $5,000. You are going to put $100,000 in as a down payment. This is how we would do it:

Assets                                Debit            Credit                    Proforma            
Cash                400,000                          100,000 (1)             300,000
Acct Rec.
Inventory                                95,000 (1)                                  95,000
Other Curr.                              5,000  (1)                                   5,000
Curr Asset      400,000                                                          400,000

Fixed Asset                           900,000                                    900,000
Other Asset
Total Asset     400,000                                                       1,300,000

Liabilities 
Accounts pay
Notes Pay                                                 29,184 (2)              29,184
Accruals
Current Liab.                                                                           29,184  

Notes Pay                                               870,816 (2)            870,816
Total Liab.                                                                             900,000

Net Worth        400,000                                                        400,000

Total Liab        400,000                                                      1,300,000
& Net Worth


The loan was for $900,000 with 6% interest and the term was a Weighted Average (see article on Weighted Average), of 17.5 years, which is allowed by SBA but a bank may look at the term differently.

The Addition of new assets and the subtraction of cash (see 1) is basic math and is put in debt and credit for inclution in SBA Bank Form. The Notes Payable (see 2) is broke out into Current (one year or less) and Long Term (over one year) . Again the liabilities are put in as debtis or credits,  as an increase in liabilities and if put on SBA Form would be a Credit to Liabilities.

Didn’t seem too hard. It does get confusing if an existing company has assets and liabilities in all the categories. Always remember to fill in equity last and use the formula, Equity = Assets – Liabilities. Or Assets = Liabilities + Equity. 

For contact information or additional information please see my website at www.schlueterfinancial.com