How to create good financial projections for SBA startup financing?

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What are startup financial projections?

Simply put, startup financial projections is a chart that shows lenders how your business will perform if they give you a business loan. This chart breaks down your company’s revenue & expenses during your first 2-3 years in business.

How should startup financial projections look?

Here is an example of what your startup financial projections should contain when applying for a startup SBA business loan.

Revenue= How much your business will bring in every month from sales.
Expenses= Your costs to run your day-to-day operations.
Net Profit/Loss= Your Revenue minus your expenses. Each month your business will either show a profit or loss.

This is an oversimplified version of startup financial projections. To get a full template, schedule your free lending consult here.

What is the purpose of startup financial projections?

Lenders are looking to see when your business will cash-flow, meaning when your monthly revenue will be able to cover all of your monthly expenses, plus your SBA business loan payment, while still having some cash leftover for unexpected situations.

Tips to remember when creating startup financial projections.

Here are some tips to keep in mind when creating your startup financial projections:

1. Before guessing your monthly revenue, ask yourself how many different services you will provide, how many clients every month will want these services, and how much will they pay for them. This will give you your monthly revenue.
2. Then ask yourself what it will take to run your business every month. How many employees will you need, supplies, equipment, etc. Subtract your monthly expenses from your monthly revenue, and make sulre by month 6 you are showing a profit.
   
   Lenders don’t mind if you show a loss for the first 2-6 months of your business, just make sure after that 6-month mark, your business can pay its monthly expenses and have some money left over.
3. Lenders will research your industry and/or look at projections from other similar startup businesses to make sure you are not exaggerating your revenue, or under reporting or over reporting your expenses.

So make sure you do your own research and talk to other business owners in your field to make sure your figures are realistic. You can also get quotes from service providers to make sure your expenses are accurate.

Final note…

Financial projections are not just for the lender, it’s to make sure you understand your business, the growth it’s capable of, and have a financial roadmap to success. To receive help with your startup financial projections, request your free lending consult below.

Request Your Free Consult

Continue Your Startup Journey

If you need more startup loan help, make sure you check out these articles:

• What disqualifies you from getting a startup SBA loan?
• Why can’t startup businesses easily get financing from banks?
• Do you need a down payment for an SBA loan?
• Do banks loan money for business startups?

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