You’re an early, middle, or even late-stage entrepreneur, and you’re looking to take the next step in your business.

You know you need a loan to see your business grow – by hiring employees, purchasing and/or renovating a building, and acquiring new technology or equipment. You’ve compiled all the preliminary documents for a loan application, and you’re now ready for the next step of the process: Tackling the financial statements.

Once again, we went straight to the lending and small business development expert, Loan Program Manager, David Dunn. David manages AEDC’s Urban Made program; the initiative which extends business outreach, advocacy, and support to local manufacturers, entrepreneurs, and business owners. Dunn has consulted with dozens of business owners and startups throughout his tenure. Daily, he assists eligible borrowers with the resources needed to access capital and funding. We recently shared his advice on how to simplify the preliminary steps of a loan application, and now we’re sitting down to talk next steps.

To access funding through any of the options available through Urban Made, here are the financial documents you need to prepare and discuss in your application:

Accurate and current financial statements:
  • Whether cash or accrual-based, monthly Profit/Loss (P/L) and balance sheet statements demonstrate that you closely manage your business. You should make sure your P/L Cost of Goods Sold is accurate and account for all costs directly related to producing your product or providing your service. You need to make sure that expenses like payroll and associated taxes, utilities, rent, insurance, etc., are present and charged for their applicable period(s).
  • Your Accounts Receivable (A/R) and Accounts Payable (A/P) registers should be current. Be prepared to explain any A/R or A/P balances 90 days and beyond.
Business and personal financial statements and tax returns:
  • Providing two-to-three years of both sets of statements and returns is standard. If your business is younger than that, you'll utilize your existing and available documents. Accountant-prepared fiscal year-end financial statements for taxes should match the tax returns and, LLC/S corporate income should flow and match personal statements and returns. If you file taxes jointly, you need a separate statement if your spouse will not be part of the loan application.
Current and projected cash flow statement:
  • This information confirms that you have the current and future projected cash to meet the monthly loan obligation. Typically, projections extend out two years.
  • Cash flow statements should be conservative and defensible based on your projections. Assume higher costs and inflation factors where and when appropriate.
  • Unless you own substantial liquid business assets outright, you need to expect that lenders will require collateral from outside the business – i.e., personal guarantees from all business stakeholders.
  • You should be upfront and clear with your spouse/partner about this. You are leveraging your personal wealth against the prospects of your business’ success. If you jointly own real estate with your partner, they may also need to guarantee the loan.
Outside of the traditional information above, borrowers should prepare for the following questions, directly or indirectly, as they are often asked. Think of these as a different type of business plan, one that successful owners regularly evaluate and answer:
  • Will this loan help my business reach a goal or solve a problem that is holding me/us back?
  • Do I have or will I have the cash flow to financially support the loan?
  • Are my business systems, procedures, and prospects in place to utilize the funds productively and profitably?
  • Do I have the processes, controls, software, and resources to manage this?
  • Will I need to hire people, and have I factored in the true total cost of hiring/training, including wages and benefits?
  • How much time/effort is required to bring a new piece of equipment online and into production generating revenue? Will this equipment lower my costs, increase my production, or both?
Following the plan using the Business Model Generation template created by Alexander Osterwalder & Yves Pigneur, can you clearly and concisely describe:
  • The purpose of your business – what unique value-added proposition do you offer?
  • What key activities do you engage in to generate revenue?
  • Who are your key partners?
  • What are the essential resources you need to run your business?
  • Who is your target customer, and where is your target market? Is it growing or shrinking?
  • Who are your competitors, and what are the barriers to new competitors entering your market space?
  • What channels do you employ to reach your customer – direct/internet/referral sales?
  • Looking at your management expertise, what is your industry experience and management background? Do you have access to expert resources that can assist/partner with you?
  • How is your business structurally organized? Who are your key employees, and how long and how much experience do they have in your industry?

Road map for the Future

Whether it’s a new venture or an existing company, applying for a loan is more than just gathering paperwork. It is and should be an introspective process to evaluate where you are and where you want to go with your business. You start by preparing accurate and consistent information. If the numbers and the strategy will work, you finish with a business plan that serves as a roadmap to your future.

Do you have questions? Are you wondering whether you qualify for a loan through AEDC’s Urban Made program? Program Manager David Dunn would be happy to discuss your options and how to take the next step in growing your business. David can be reached at or 610-435-8890.

What type of loan options are available? Under the Urban Made program, loan applicants have access to three local funds for up to $100,000: The City of Allentown Enterprise Zone Loan Fund, The City of Allentown Economic Development Loan Fund, and The Allentown Development Corporation Loan Fund. The options for borrowers don’t just end there. AEDC also administers a Revolving Loan Fund Program for the Pennsylvania Minority Business Development Authority (PMBDA). Applicants who qualify as socially or economically disadvantaged minorities can apply for up to $250,000 in financing through the PMBDA loan program. 

Lauren Matthews