A projected balance sheet is one of the most important financial statements that you will require when seeking a business loan or constructing a good business plan. It provides the anticipated assets, liabilities, and equity of your firm- which will give the lenders a clear picture of your future financial status.
As a matter of fact, a Reserve Bank of India (RBI) noted that more than 70% of loan rejections among SMEs occur when the loan applicants do not provide complete or unclear financial projections. Therefore, when you are preparing a projected balance sheet for bank loan or when you are preparing realistic projections in bank loan approval then this document is very important.
This blog will demonstrate the creation of a good quality projected balance sheet in stages.
What is Projected Balance Sheet?
A projected balance sheet is a financial statement that indicates how your business will be financially in the future. It is just a picture of where your business is going–not where it is at present. This is a sheet that contains your estimated assets, liabilities, and equity at a given future point in time, which is normally done when one is applying to a loan facility, investment plan or when forecasting a business venture.
In case you are seeking a bank loan, an adequately prepared projected balance sheet for bank loan will enable the lender to determine how stable your business is likely to be. It is one of the most significant sections of your projections to be approved by the bank to give you a loan.
Important Facts Regarding Projected Balance Sheet
- Why It Matters: It provides banks and investors with confidence in your business to repay the loan and develop sustainably.
- What It Contains: Future values of your total assets (cash, inventory, equipment), liabilities (loans, payables) and owner equity.
- When It Is Applied: It is mainly used in the application of loans, in pitching to investors, or in the establishment of long-term goals in the business.
- The way to make it: You can create a projected balance sheet online using tools like Finline or with accounting software. This saves time and guarantees bank ready formats.
- Standard Format: The standard projected balance sheet format usually has assets (current and non-current), liabilities (short-term and long-term) and equity (owner capital and retained earnings).
- Projected Balance Sheet Formula: To put it simply, the projected balance sheet follows the formula Assets = Liabilities + Owner’s Equity, ensuring the statement stays balanced even in future forecasts.
To put it simply, when you are preparing financial documents to a bank or an investor, a projected balance sheet is not only useful, it is mandatory. So what is the good news? You do not necessarily have to be a financial expert. Projected balance sheet online can be easily generated with the help of platforms such as Finline that will help you create reports that banks will accept.
How Finline Can Assist You To Prepare a Projected Balance Sheet?
A projected balance sheet is not only a financial statement but it is also a statement of your business vision, planning and credibility. No matter what you use it for, whether it be a bank loan, investments, or just having extra plans, a clear projection is good to keep you financially sound and prepared to grow.
In case you have no idea where to begin, Finline is here. It is an online platform that is simple to use and allows you to create bank-ready projected balance sheets within minutes. No complex formulas or templates, just plain smart tools that entrepreneurs like you can use. Use Finline and invest in your financial future. Create your projected balance sheet now!
