Small business lenders often rely on tax returns when analyzing a borrower. Tax returns can provide significant information to assess the small business borrower’s credit worthiness and repayment capacity if the lender knows what information to request and analyze. The schedules such as Schedules K, K-1, M-1 and M-2 can be confusing. Further complicating the analysis of tax returns of borrowers organized as S Corporations and LLCs; many items of income and expense flow through to the shareholders, partners and members personal tax return.
One of the more challenging aspects of lending is analyzing personal financial statements and tax returns. Assessing the borrower’s ability to convert assets to cash to pay short-term debt or honor a guaranty often requires significant adjustments to the borrower’s reported net worth. Adjusted gross income on Form 1040 bears no relationship at all to cash available to pay personal living expenses and debt service. To determine cash available, the lender must construct a personal cash flow using information contained in the personal financial statement and schedules of the tax return. Lenders recognize that the business and personal financial affairs of small business borrowers are closely intertwined necessitating the integration of business and personal cash flow to determine global cash flow.
After completing this 2-part online loan seminar, participants will be able to:
Who Should Attend?
$395 for Webinar and Playback*
Dates of Event
(Pt. 1) Monday, February 5, 2018
(Pt. 2) Monday, February 5, 2018