$1.16M
Revenue (TTM)
+35% on prior twelve months
An evaluation of the company's financial position as a lender will read it, an indicative range of credit for which the business may qualify under three common facility structures, the documentation a lender will require, and the preparatory actions recommended before an application is submitted.
On a cash-flow basis (the method most commercial banks apply to a business of this size), the company supports a revolving line of approximately $115,000 to $230,000. Under an SBA-guaranteed structure the range widens to $150,000 to $350,000. An asset-based facility secured by receivables and inventory could reach $360,000 to $410,000, subject to a field examination and inventory appraisal that will discount slow-moving stock heavily.
The recommended request is $250,000, framed as seasonal working capital: it covers the largest single-month cash shortfall observed in the period ($125,000 in June 2026) with a two-fold buffer, and on a fully drawn basis represents 4.5× trailing EBITDA — at the upper edge of what a cash-flow lender will accept, and defensible only if the line is presented as revolving rather than permanently drawn.
Three matters should be resolved before any financial statements are provided to a lender:
1. Thirty-three "TEST" invoices totalling $764,000 remain open in accounts receivable. A lender pulling an A/R aging today would see $473,000 more than 90 days past due — all of it these entries. They must be voided or reclassified.
2. Seed journals ("Beg Balance Entries") establish essentially all of the cash and $2.23 million of the equity shown in the general ledger. Bank statements, not the ledger, must be the source of cash figures supplied to the lender.
3. Sales-tax payable of $228,000 across thirteen states should be reconciled to filings. Lenders treat trust-fund liabilities as a threshold item.
Figures are drawn from posting transactions in the three operating subsidiaries, excluding the elimination subsidiary, invoices with memo prefix "TEST", and journals with memo prefix "Beg Balance". Income-statement items are trailing twelve months; balance-sheet items are as at 13 September 2026.
| Measure | Company | Typical lender threshold | Assessment | Derivation |
|---|---|---|---|---|
| Gross margin | 45.7% | ≥ 25–30% (distribution) | Strong | (Income − COGS) ÷ Income, GL basis |
| Revenue growth (TTM vs prior) | +35.1% | Positive | Strong | $1,139,013 ÷ $843,333 − 1, sales-document basis |
| Operating margin | 3.2% | ≥ 5% | Below | $36,643 ÷ $1,155,881 |
| EBITDA margin | 4.8% | ≥ 8–10% | Below | ($36,643 + $19,352) ÷ revenue |
| Interest coverage, pro forma $250K at 9.5% | 2.4× | ≥ 1.25–1.5× (DSCR) | Adequate | $55,996 ÷ $23,750; interest-only revolver |
| Debt ÷ EBITDA, pro forma $250K fully drawn | 4.5× | ≤ 3–4× | Upper limit | $250,000 ÷ $55,996 |
| Current ratio (excl. cash) | 3.0× | ≥ 1.2× | Strong | $1,404,213 ÷ $468,043 |
| Quick ratio (A/R ÷ current liabilities) | 0.35× | ≥ 0.8–1.0× | Weak | $163,016 ÷ $468,043; cash excluded (see §08) |
| Inventory turns | 0.56× | ≥ 3–4× (distribution) | Weak | COGS $627,797 ÷ inventory $1,121,098 |
| Days sales outstanding | 51 | ≤ 45–60 | Acceptable | A/R ÷ (revenue ÷ 365) |
| Days payable outstanding | 31 | ≤ 45 | Acceptable | Open bills $184,048 ÷ (TTM purchases ÷ 365) |
| Largest customer share of revenue | 15.0% | ≤ 25% (ineligible above) | Within limit | Top-10 customers = 82%; will be noted |
An earlier internal analysis quoted inventory turns of 1.8. That figure inverted the ratio. The correct computation — cost of goods sold divided by inventory at cost — yields 0.56 turns, equivalent to approximately 652 days of supply. This is the single balance-sheet item most likely to constrain the facility: an asset-based lender will commission an appraisal and is unlikely to advance against stock without twelve-month sales history, and a cash-flow lender will regard $1.1 million of inventory against $628,000 of annual cost of sales as capital that should be released before external credit is extended.
Three structures are commonly available to a company of this profile. Ranges below are indicative, derived from published underwriting conventions applied to the company's figures; individual lenders vary.
| Structure | Indicative range | Sizing basis | Typical terms | Suitability |
|---|---|---|---|---|
| Conventional bank revolving line | $115,000 – $230,000 | 10–20% of annual revenue, or 2–4× EBITDA ($112,000–$224,000). Both methods converge on this range. | Prime + 1–3%; annual renewal; blanket UCC lien; personal guarantee of owners ≥ 20%; annual clean-up period common. | Most accessible. Two years of operating history is the usual minimum and is met (first sales October 2024). |
| SBA Express or CAPLines | $150,000 – $350,000 | SBA Express to $500,000 with 50% guarantee; CAPLines (Working Capital) sized to a borrowing base. Lenders extend further because of the guarantee. | Prime + 4.5–6.5% (Express); 7–10 year revolving term possible; SBA guarantee fee; personal guarantee mandatory; collateral to the extent available. | Appropriate if the conventional range is insufficient. Documentation burden is higher (Forms 1919, 413, 912) and approval takes 30–60 days. |
| Asset-based lending | $360,000 – $410,000 | 80–85% of eligible A/R (< 90 days, no concentration > 25%) ≈ $109,000–$129,000; plus 30–40% of eligible inventory at cost ≈ $324,000–$432,000, subject to appraisal and commonly capped at 50% of the total line. | Prime + 2–5% plus collateral-monitoring fees; monthly borrowing-base certificates; field examinations; dominion of cash. | Largest capacity but highest cost and administrative load. The 0.56 inventory turn will attract a low net-orderly-liquidation value and may shrink the inventory component materially. |
| Recommended request | $250,000 | Conventional or SBA revolving line, positioned as seasonal working capital. Covers the June 2026 peak monthly shortfall ($125,000) twice over; 4.5× EBITDA fully drawn, 2.4× interest coverage. Present a drawdown schedule that shows the line revolving to zero at least once per year. | ||
Sizing conventions (percent-of-revenue, EBITDA multiples, advance rates) reflect general commercial-lending practice in the United States for companies with revenue under $5 million. They are not quotations. Actual approval depends on the lender's credit policy, the owners' personal credit and net worth, industry risk weighting, and the quality of the documentation package described in Section 06.
Lenders will ask why the company needs a line and when it will be repaid. The monthly cash movement below, taken from customer payments, cash sales and deposits against vendor payments and cheques, answers both.
Inflows were $1,269,000 for the twelve months and rose steadily from ~$90,000 to ~$130,000 per month. Outflows were $1,679,000, with a pronounced surge from March and a peak of $241,000 in June. Over the final six months, disbursements ($1,104,000) exceeded receipts ($701,000) by $404,000 — the cash cost of building inventory to $1.1 million ahead of sales.
A lender will read this as growth-driven working-capital strain rather than operating loss, which is the correct framing, provided the company can show that the inventory is saleable and that turns will improve.
State the purpose narrowly: (i) to bridge the gap between vendor payment terms (31 days) and the combined inventory-holding and collection cycle; (ii) to fund seasonal stock build in the second and third quarters; and (iii) to hold as a liquidity reserve for the Midwest distribution launch.
Do not present the line as a means of funding operating losses or of financing the existing $1.1 million inventory position; lenders regard both as indicators of a term-loan or equity need, not a revolver.
The factors below are those a credit officer is most likely to weigh. Each is stated with the figure the lender will see and the position the company can reasonably take.
| Factor | Figure | Lender's likely view | Company's position |
|---|---|---|---|
| Operating history | 23 months of sales; two full fiscal years by Dec 2026 | Meets the two-year minimum applied by most banks; start-up risk premium may still apply. | Apply after FY2026 close so that two complete tax returns are available. |
| Leverage | No existing debt | Favourable; the facility would be the senior and only lien. | Confirm no undisclosed owner loans or equipment leases outside the ledger. |
| Profitability | 3.2% operating margin; 4.8% EBITDA | Thin; limited capacity to absorb interest cost or a revenue setback. | Advertising ($247,000, 21% of revenue) is discretionary and is being re-based; present a pro forma at 12% of revenue. |
| Gross margin | 45.7%, stable | Strong for distribution; indicates pricing power. | Lead with this figure in the narrative. |
| Receivables quality | DSO 51 days; 725 paid invoices settled in a median of 0 days | Acceptable, but the raw aging shows $473,000 over 90 days. | The over-90 balance is entirely test entries; clean before the lender pulls the aging. |
| Customer concentration | Top customer 15%; top 10 = 82% | Within the 25% single-name limit, but the top-10 share will be noted as a risk factor. | Provide a concentration schedule with tenure (all top-10 accounts have bought in 20+ of 23 months). |
| Inventory | 0.56 turns; $40,000 dead stock; 206 never-sold items | Principal weakness; questions saleability and management discipline. | Present the SKU-rationalisation plan and a target of 2.0+ turns within twelve months. |
| Payables conduct | 97% of open bills current | Favourable; indicates vendor relationships are in good standing. | Supply vendor references (top three vendors account for $1.23 million of spend). |
| Tax liabilities | $228,000 sales-tax payable, 13 states | Threshold item; delinquency is disqualifying. | Reconcile to filed returns; obtain state good-standing certificates where available. |
| Financial statement quality | Ledger contains $764,000 of test invoices and seed journals | If discovered by the lender, credibility of all figures is impaired. | Complete the clean-up in Section 07 before releasing any statement. |
The list below is representative of a conventional or SBA working-capital application. Items marked with their NetSuite source can be produced directly from the account once the clean-up in Section 07 is complete.
| Document | Detail | Source |
|---|---|---|
| Business financial information | ||
| Business tax returns | Two to three most recent years, all schedules. FY2024 (partial) and FY2025; FY2026 once filed. | Tax preparer |
| Year-to-date interim financial statements | Income statement and balance sheet, current year to the most recent month-end; prior-year comparative. | NetSuite Income Statement and Balance Sheet reports, after clean-up |
| Accounts receivable aging | Detail by customer, dated within 30 days of application. | NetSuite A/R Aging report |
| Accounts payable aging | Detail by vendor, same date. | NetSuite A/P Aging report |
| Inventory listing | By item and location, quantity and cost; ideally with last-sale date to pre-empt the saleability question. | NetSuite Inventory Valuation report; item sales history |
| Business bank statements | Three to six most recent months, all operating accounts (accounts 1010 and 1011). | Bank |
| Schedule of existing debt | Statement that no interest-bearing debt exists, signed by an officer. | Prepared from ledger |
| Customer concentration schedule | Top ten customers: revenue, percentage, tenure, terms, payment history. | NetSuite sales by customer |
| Twelve-month projection | Monthly P&L and cash flow showing line usage and repayment; assumptions stated. | Prepared from Section 04 pattern and the growth plan |
| Ownership and organisation | ||
| Formation documents | Articles, operating agreement or bylaws, certificate of good standing in the state of formation. | Corporate records |
| Ownership schedule | All owners with percentage held; each owner ≥ 20% will be asked to guarantee. | Corporate records |
| Personal financial statements | For each guarantor; SBA Form 413 if SBA-guaranteed. | Owners |
| Personal tax returns | Two years for each guarantor. | Owners |
| Identification and EIN | Government identification for signers; IRS EIN letter. | Corporate records |
| Narrative | ||
| Business description and use of proceeds | One to two pages: what the company does, channels, locations, why the line is needed, how it revolves. Section 04 provides the substance. | Management |
| Management summary | Principals' backgrounds and roles. | Management |
| Additional for SBA programmes | ||
| SBA Form 1919 | Borrower information form. | SBA / lender |
| SBA Form 912 | Statement of personal history, if required by responses on Form 1919. | SBA / lender |
| Evidence of equity injection | Where required by the lender's SBA policy. | Bank statements, capital records |
Recommended sequence. Steps one through four are conditions precedent; steps five through eight improve the terms obtainable.
Income-statement figures are posting general-ledger transactions in subsidiaries 1, 2 and 3 for accounting periods September 2025 through August 2026, excluding transactions whose memo begins "Beg Balance" or "TEST". Revenue growth uses invoice and cash-sale lines on transaction date. Balance-sheet figures are cumulative posting transactions to 13 September 2026 on the same exclusion basis. Depreciation and amortisation of $19,352 is taken from expense accounts 6810 and 6880. Interest expense of $49,308 recorded in account 8100 arises entirely from seed journals and has been excluded.
The general ledger reports bank balances of $2.57 million. Of this, $2.84 million was established by seed journals and $0.82 million by capital journals; operating transactions net to an outflow of $1.06 million since inception. The ledger cannot therefore be relied upon for the company's actual cash position, and the quick ratio in Section 02 excludes cash. Bank statements should be the sole source of cash figures supplied to a lender.
Underwriting thresholds, advance rates, pricing and programme limits are general United States commercial-lending conventions as of the preparation date and are not offers or quotations. Revenue and profit figures assume the exclusions above capture all non-operating entries; a further review of journal entries by the company's accountant is recommended. Payment-behaviour figures (median 0 days to pay) are inconsistent with a 51-day DSO and suggest that payment dates in the ledger may not reflect actual settlement; the lender's analysis will rely on bank statements for this point.
This document is advisory and was prepared from accounting records without independent verification, without review of tax filings, bank statements, contracts or personal financial information, and without knowledge of the owners' credit standing. It does not constitute financial, legal or tax advice. No records in the accounting system were created, modified or deleted in its preparation.