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Does it seem like a secret decoder ring is needed to convert business tax returns to cash flow? The confusion arises because tax returns were created to report taxable income, not cash flow – which is what is needed to qualify a borrower. Even more complexities arise when a tax return is for a Partnership or S-Corp because both are “pass-through” entities. The business does not pay taxes directly; instead, taxable income is passed through to the owners’ individual tax returns. A lender’s job is to disentangle the passed-through incomes, reassemble them for the business, then determine what net income can be used as qualifying income.
Overestimating the income from a tax return can lead you to approve a weak loan that could result in hundreds of thousands of dollars in losses. Underestimating income can lead you to deny good loans that you need to grant. This webinar will help take the mystery out of Partnership and S-Corp tax returns and you’ll learn how to quickly and reliably identify a business’s real monthly cash flow.
For more information or to register CLICK HERE