8(a) Application Company Financials Requirements

Dear Prospective 8(a) Applicant,

One of the biggest hurdles our clients face is preparing accurate company financials. Here are the requirements:

SBA Item 2. Interim or year-end balance sheet and profit and loss statement no older than 90 days from the application date.

☐ Ensure that the financial statements meet the SBA criteria for determining that your company exhibits a “positive potential for success” as represented by a positive equity, positive working capital, i.e., Current Assets-Current Liabilities>$0, and positive current period earnings, i.e., profitable at the time of the application.

☐ If the statements are provided on an accrual versus cash basis, provide an Accounts Receivable (AR) and Accounts Payable (AP) aging report for the same data represented by the financial statement, ensuring that the amounts shown for AR and AP from the aging reports match the values shown on the balance sheet.

☐ If the balance sheet provided indicates the existence of a loan from or to any individual or organization, provide a complete executed copy of the loan agreement and include it in Item 9.

That being said, here is a quick guide to determining the acceptability of financial statements:

The SBA will require at least three (3) time periods for the financial statements, e.g., 2018, 2019, 2020, and interim 2021 balance sheets and income statements to enable the SBA to assess the carry-over of Retained Earnings from one year to the next.
Note the Current Period Earnings from the income statement and check to see that this exact value is that shown in the Equity portion of the associated balance sheet for that period.
The Equity portion of the associated balance sheet should have the following format:
EQUITY
     Original Paid in Capital
     Additional Paid in Capital
     Retained Earnings (from previous accounting period)
     Current Period Net Earnings
     Owners Withdrawal
TOTAL EQUITY

4. The Retained Earnings at the end of each year =

TOTAL EQUITY- Capital

5. If the balance sheet shows accounts receivable (AR) in the Assets section of the balance sheet and/or accounts payable (AP) in the Liabilities section of the balance sheet, then the applicant must provide AR and/or AP aging reports for the most recent financial statement provided.

We can also provide you with templates to prepare the financials properly. Simply give me a call or email me, and I will send them you.

Interested? Call me at 703-966-5560 to discuss your particular situation.

Sincerely,

Richard J. Otero, Sr.
President

Otero, LLC

703-966-5560 (Cell)

410-672-6904 (Office)

Email: wilmaxllc1@aol.com

Web Address:

www.The8aAuthority.com

wilmaxllc1@aol.com

Contact Me:

(410) 672-6904

Otero, LLC

8606 Wintergreen Court, Suite 207

Odenton, Maryland 21113