Messy books
A Lender Has Asked for Financial Statements and the Books Are Not Ready
The bank wants a profit and loss statement, a balance sheet and your returns, and it wants them soon. Tell us the date. The package is built to agree with itself, because that is what an underwriter tests.
What lenders usually ask for
- Business tax returns for the last few years
- Personal tax returns for each owner
- A year-to-date profit and loss statement
- A current balance sheet
- A schedule of existing business debt
- Recent business bank statements
- Sometimes, aged receivables and payables
The exact list depends on the lender and the loan. Ask your loan officer for theirs in writing and send it to us. It decides what we build first.
What an underwriter actually checks
- That the financial statements agree with the tax returns for the same years
- That the returns you hand over match what was filed. Lenders commonly verify this with the IRS directly
- That the cash on the balance sheet matches the bank statements
- That every loan you owe appears, at the right balance
- That year-to-date figures are consistent with prior years, or the change is explained
- That owner pay and personal spending are identifiable, because they affect what the business can afford
This is why cleaned-up books cannot simply be made to look good. If the statements show more profit than the filed return did, the lender will see both. Where the return was wrong, the honest route is to correct it. See loans and owner money for the balance sheet items that most often fail this test.
How we prepare it against a deadline
- Get the lender’s checklist and the date
- Check whether all required returns are filed. If not, that comes first
- Bring the current year up to date and reconcile every account
- Agree opening balances to the last filed return
- Record all debt at the lender-statement balance and build the debt schedule
- Produce the statements and review them with you before they go out
If prior years are also unrecorded, we tell you at the start how much can be finished properly by the date, and what to say to the loan officer about the rest. Lenders deal with this often and would rather have a realistic date than a package that falls apart.
What these statements are
We prepare financial statements from your reconciled books for your own use and for your lender. They are not audited or reviewed statements, which are assurance services that only a licensed CPA firm can provide, and we are not a CPA firm. Most small business loans do not call for them. If your lender does, tell us early and we will say so plainly.
Frequently asked questions
How quickly can you get financial statements ready for a lender?
It depends on how many months are unrecorded, how many accounts there are, and whether the tax returns are filed. We ask for the lender’s checklist and deadline first and tell you whether the date is realistic before starting. See how long cleanup takes.
Will the lender compare my statements with my tax returns?
Yes. Underwriters compare the two for the same years and commonly verify the returns with the IRS. Statements that disagree with filed returns raise questions, so the books are built to agree with what was filed or the return is corrected.
I have not filed my last two years of returns. Can I still apply?
Most lenders will want them filed first. The books for those years are rebuilt and the returns prepared, and then the current-year statements are produced. See unfiled business returns with no books.
Do you provide audited or CPA-reviewed financial statements?
No. We prepare financial statements from reconciled books. Audits and reviews are assurance services that only a licensed CPA firm can provide. Most small business lending does not require them, but check your lender’s list.
Not the question you had? The full tax FAQ covers more ground, and our client reviews say what the work is actually like.
Related situations and guides
Loans and owner money booked wrong
Loan deposits as income, repayments as expenses, draws as wages. The balance sheet items that distort profit.
Learn moreA tax deadline and no books
The return is due and there are no numbers. What gets done first and what an extension really covers.
Learn moreHow long a cleanup takes
The six things that decide the timeline, and the two you control.
Learn moreSelling or buying a business
Books that have to survive a buyer’s review, or a seller’s mess you just inherited.
Learn moreCleanup Planner
Eight questions, then a plan: what comes first, what to gather, and which guides apply.
Part of Messy Books Help, alongside our catch-up bookkeeping service.
Tell us what you need
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