What is a Personal Financial Statement?

 Click below to view and download a Personal Financial Statement.

A personal financial statement is a form or a document that both details and summarizes an individual’s financial position at a set date in time. Most personal financial statements will include general contact information of the person completing the statement, as well as summaries of the individual’s personal assets and personal liabilities.

Though it is not a generally accepted account practice, many individuals applying for a new insurance agency or financial advisory loan will also include their business or agency assets along with any insurance agency or financial advisory practice liabilities on their personal financial statement.

Lending Requirements

Capital Resources, like most other lenders, requires each applicant to complete and submit a current personal financial statement for each insurance agency or financial advisory loan application request. This is one of the means used to determine the general financial health of a current or prospective insurance agency or financial advisory loan customer.

A personal financial statement is comprised of two main components: Assets and liabilities. Current assets might include current cash held in accounts, retirement account balances, real estate, stocks, bonds, and even long-term note receivables. Personal assets such as art, furniture, fixtures, firearms, etc. may have real value, but most lenders do not look at these items as real assets that increase an individual’s real net worth.

The liabilities component of the personal financial statement summarizes any monies owed by the individual to any other people or entities. Liabilities might include credit card balances, mortgages, insurance agency or financial advisory seller note payables, or other insurance agency, financial advisory, or other business-related loans. Other liabilities might include unpaid bills, such as unpaid taxes, utilities, and even unpaid legal settlements.

Once all assets and liabilities have been compiled, the total number of liabilities are subtracted from the total value of assets. The resulting product is the individual’s net worth. A positive net worth means your assets are worth more than the sum of all the amounts you owe. A negative net worth means your assets are worth less than what you owe. The more positive the net worth, the stronger of a loan candidate you become in the eyes of most insurance agency and financial advisory lenders.

Personal financial statements are also used to disclose to lenders, or other interested parties, any items from the individual’s past that might explain their current financial position. Examples of these might be a previous bankruptcy, any previous or current legal settlements or ongoing litigation.

Accuracy is an Important Asset

When completing a personal financial statement as part of an insurance agency or financial advisory firm loan application, it’s important to be as honest and accurate as possible. Be sure to look up current loan balances and don’t estimate them. The more accurate your numbers are compared to what’s reported by the credit bureau, then the more prepared you appear to a lender. Making any intentionally dishonest statements or disclosures as part of the application process may carry heavy consequences. Remember, accuracy is important.

Most lenders prefer or even require that you use their personal financial statement when applying for a loan from them. At Capital Resources we’ve created our personal financial statement with you in mind. We have streamlined the statement as much as possible while giving our customers a tool that details their current financial condition as much as possible.

Completing your own personal financial statement can sound daunting. With a better understanding of a personal financial statement and how it works — along with our easier electronic form —  you can quickly work your way through it and be one step closer to your new insurance agency or financial advisory loan.

Learn more about how our loan process works:

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