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There are 5 posts in this series:
- Personal Financial Statement
- Balance Sheet
- Income Statement
- Cash Flow Statement
- Glossary of Key Financial Terms
A “Personal Financial Statement” is a document that may be requested when applying for financing or when purchasing a business. It presents your complete personal financial situation as of a specific date, and will include all of your significant:
- Assets: current market value of things you own
- Liabilities: amounts you have a legal obligation to pay
A lender will typically ask for a PFS when it wishes you to personally guarantee a loan.
A typical summary section might look like this:
It usually includes a “Net Worth” amount, which is calculated by subtracting Liabilities from Assets. This describes how much money you would have left after you turned all of your assets into cash and used it to pay off all liabilities.
If you are asked to submit a Personal Financial Statement in connection with a financing application, you are likely to be asked to sign a document personally guaranteeing any financing you receive. That means you may be asked to use any and all of your personal assets, if needed, to repay the financing in the event that your company is not able to do so on time.
The exact format of a Personal Financial Statement may vary. Many will ask for a summary of amounts in the first section, followed by lengthier details on each in a second section. For example, the initial summary might only list
- Credit Card Debt $1,500
but the later section would ask for additional details that would help someone else to verify its value, such as:
- Bank of America Visa $500
- Key Bank MasterCard $1,000
You will be expected to sign the document as a certification of its completeness and accuracy. Submitting a misleading Personal Financial Statement exposes you to legal liability for fraudulent representation. Estimates of some values are acceptable - disclose and discuss them!
A typical Assets Detail section might look like this:
And a typical Liabilities detail section might look like this:
If you have questions about what is being asked for anywhere on such a form or spreadsheet, ask for clarification.
A Personal Financial Statement spreadsheet template can be downloaded from the SCORE website:
For questions about how your Personal Financial Statement might be interpreted by a lender, this site may help:
For a video introduction to a Personal Financial Statement, you can view:
- Mark J. Kohler - Creating a Personal Financial Statement
- Personal Financial Statement - Filling out SBA Form 413
To ask questions and/or learn more about financial statements, register for a “Financial Statements” workshop in the SCORE workshop calendar or request to meet with a SCORE Mentor (a free service).
