Avatar's Blog

» Hard Money Due Diligence - P&Ls

Posted on 6/5/2005

Before determining whether to fund a loan, Avatar Financial Group asks for P&Ls from the entity that will support the monthly payments. Revewiewing last year's and and YTD (which means uear-to-date) P&Ls (profit and loss statements) can help determine whether the borrower has sufficient cash flow each month to pay all the expenses and still have some money left over to put in their pocket.

In general, Avatar looks for a ratio of 1.2 : 1 of income to expenses on P&Ls. Knowing the purposes of the P&L, take a look at the P&Ls you are about to submit. Consider whether there are other sources of income you should acknowledge to Avatar to demonstrate that you can afford the monthly payments on the loan.

Posted in Miscellaneous