Do you have any plans of going in for a start-up? Are you an entrepreneur who is planning to start a business? Are you a business owner contemplating to expand your business? Have you any plans to take over another business? And, unless you have substantial money of your own, you will have to go in for a bank loan. Before you approach a bank or a financial institution for a loan for your business needs, there are a few things that you ought to know. Read this article and you will understand a number of things about audited financial statements.
At least 50 per cent of the loan applications from small and medium businesses are rejected by banks for one reason or the other. The lending sector is very stringent about its norms and policies, and your application will be rejected outright if it does not adhere to their norms. The lending environment is quite tough, and businesses seeking loans may find financial institutions could accept their proposal if they were to submit audited financial statements. Financial experts are of the opinion that submission of financial statements does have a bearing on the fate of the loan application.
Going to an auditor would indeed be a costly affair, but perhaps, well worth the effort. So, when you invest in audited financial statements, you can be certain of having your loan application viewed favourably, but you should review the cost of obtaining the financial statements from the auditor versus the amount of capital you need. Banks have special requirements and as some bankers could be finicky about the auditor firm you choose, you could ascertain this from the bankers before you choose an auditor. Banks have specific requirements and standards that need to be met to ensure a very good chance of your loan application being approved.
Therefore, talk to the loan manager prior to hiring an auditor, and find out exactly what the bank is looking for, and whether or not they are comfortable with the auditing firm you are planning to use.
Studies have revealed that only about half the number of the loan applications get approved, and so many of the entrepreneurs do not think it worthwhile pursuing a loan from the bank. But, apart from seeking loans from banks, audited financial statements provide other benefits to business owners.
But, do you know what exactly is an audited financial statement? Audited financial statements are financial statements of a company, prepared by a Certified Public Accountant or a Chartered Accountant for presentation to financial institutions for availing loans, or any one else who has an interest in it. The audited financial statements gives reasonable assurance that the financial statements are in accordance to the norms of the financial reporting framework. This important financial document is proof to the lender that the business is financially sound and is following good business practices. Technically speaking financial statements add credibility to the organisation’s position and performance not only to its stakeholders but to any one else.
The lending sector is very stringent in its norms and policies, and your application will be rejected outright if it does not adhere to their norms. Though the economy is improving getting loans for small and medium businesses is still taking time. The lending environment is quite tough, and businesses seeking loans may find financial institutions more friendlier if they were to submit audited financial statements.