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Profit and loss statement P&L
Also called income statement, P&L.
The statement of revenue, cost of sales and expenses over a period, requested on larger files to show margin and profitability rather than just cash moving through an account.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
Deposit-based underwriting can size an offer without one. Bank, SBA and asset-based underwriting cannot, because they need to know whether the business earns a profit and at what margin - questions bank statements cannot answer.
Lenders distinguish sharply by preparation standard. An internally generated statement from accounting software is treated as an assertion. A CPA-prepared compilation is better, a review better still, and an audit is what larger facilities require. Interim statements are compared against the last filed tax return and against year-to-date deposits.
Cash flow analysis then adjusts the bottom line: adding back depreciation, amortisation, interest, one-time items and, where justified, owner compensation above a market salary. Those add-backs are where a business that looks unprofitable on paper can still service debt - and where lenders and borrowers most often disagree.
Where this one catches people
An internally prepared P&L that does not reconcile to your bank deposits and your tax return does more harm than submitting nothing. Underwriters compare all three, and where they disagree the lowest of the three usually becomes the figure they underwrite to - while the discrepancy itself becomes a question about the reliability of everything else in the file.
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Profit and loss statement — common questions
What does profit and loss statement mean?
The statement of revenue, cost of sales and expenses over a period, requested on larger files to show margin and profitability rather than just cash moving through an account.
Where does profit and loss statement catch people out?
An internally prepared P&L that does not reconcile to your bank deposits and your tax return does more harm than submitting nothing. Underwriters compare all three, and where they disagree the lowest of the three usually becomes the figure they underwrite to - while the discrepancy itself becomes a question about the reliability of everything else in the file.
Is profit and loss statement the same as an interest rate?
Profit and loss statement is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does profit and loss statement apply to?
Term Loan, Business Line of Credit, SBA Loan, Equipment Financing, Asset-Based Lending.
Is there a worked example of profit and loss statement?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside profit and loss statement?
Debt service coverage ratio, Monthly deposit average, Personal financial statement, Qualification criteria, Quick ratio.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.