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What Banks Want To See In Your Financials

There are some key indicators that banks and private lenders will want to see in a company's financial statements before they will loan into the business. Lenders will be looking at these key metrics, so work with your business consultant to track and improve them. Financial statements are like a report card showing how well your results are doing to your parents in school.

Net Profit

Financial statements will disclose a company's net profit, The net profit is the money that a business has left over after paying all expenses. "Are you making enough money?" is often the first question asked. Unsustainable profits are bad, and losses can be good if you're on track to profitability as you scale up.

Sales Revenue

You may have a "sibei" amazing product or service, but the real question is, are people willing to buy it?

If you establish a track record of sales before seeking loans, lenders don't take on the risk of not knowing the answer to that question. Lenders care about sales growth. Are you showing an upward trend, or did the initial excitement die out?

Profit Margins

Sales are meaningless if you aren't making money. Lenders also want to see your profit margins both overall and at the individual product level. They'll also compare your margins against industry standards and their other available investment opportunities. Higher margins generally lead to a better return for investors.

If you have low margins, you'll need to demonstrate a plan for improving them. For early-stage businesses, demonstrating how economies of scale will reduce costs as you grow is usually the answer.

Cash Flow

In business, cash is king. A solid five-year plan does you no good if all your employees will walk out if you can't make payroll next week. Lenders view to cash in the bank as a sign that you can deal with unexpected problems and capitalize on new opportunities. Free cash flow, the amount of cash that's left after you meet your expenses each period, is a sign of sustainable operations. If you have both, lenders won't have to worry that you could go under at any time.

Customer Acquisition Cost

Customer acquisition cost tells how much you have to spend to get one new customer. It's calculated by dividing your marketing spend by your number of new customers. For a fledgling business, this can sometimes be a very large number. For businesses that are mostly established, this amount can be blended and reduced by repeat and referred customers, who are likely easier to acquire.


Debt scares lenders for two reasons. One is simply that if you go out of business, lenders get their money back before equity holders have a chance to claim what's left.

The second, and more important, is that debt payments eat up your cash. High debt payments can hinder your ability to meet payroll and other expenses during slow periods. They may also mean you have less cash available to help you handle a sudden surge in orders or an emergency equipment replacement.

One of the most common debt measures is the quick debt ratio—current assets (excluding inventory) divided by current liabilities. A quick ratio of 1 indicates that you can exactly meet your obligations, and the higher it is above that, the more flexibility you have.

Accounts Receivable Turnover

Accounts receivables turnover shows how long it takes you to collect money from customers. This tells lenders two important things.

First, are you willing to do what's necessary to make sure you get paid? Many new business owners feel bad asking for money and end up never getting paid. A lender doesn't want to work with someone who isn't good at tracking down customer payments.

Second, how stable are your customers? A slow turnover combined with a large percentage of write-offs could indicate that many of your customers don't have financially sound operations. This adds risk to your business model, and investors will want to see an increased return to compensate.

Personal Investment

You deserve sweat equity for the hard work it took to get your business running, but many lenders will want to see that you've made a financial equity investment as well. If you have money at stake, lenders believe that you'll do what it takes to protect it. If you're not at risk of losing financial capital, investors may fear that you'll view them as a blank checkbook and burn through cash without enough focus on protecting their investments.

Need to get government assisted bridging loan with the banks or short term SME loan with private lenders? Apply with us now!

The TBLP was introduced to help enterprises access working capital.

As announced in the Solidarity Budget on 6 Apr 2020, the Government will enhance the TBLP further with 90% risk share. The enhancement will apply to new applications initiated from 8 April 2020 until 31 March 2021. For applications that are pending approval from PFIs, enterprises are advised to speak to their PFIs on their eligibility.

As announced on 12 Oct 2020, TBLP will be extended from 1 Apr 2021 to 30 Sep 2021. Under this extension, the Government’s risk-share on the loan will be lowered to 70% with the maximum loan quantum lowered to S$3 million. This is to calibrate the support for businesses as the economy gradually recovers.

As announced on 5 Jul 2021, TBLP will be further extended for 6 months, from 1 Oct 2021 to 31 Mar 2022, under the same parameters

If you do not know what type of SME business loan suits your needs, Apply With Us Now and we will show you how!

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