Quick Recap
Session 1 (Feb 12) established the foundation. Before we build on it, let's confirm you completed the homework.
FSC First lends based on your ability to repay from cash flow (DSCR), not your personal credit score. This changes everything about how you prepare.
Your business EIN, dedicated bank account, and DUNS number create a wall between personal and business finances. Lenders need to see this wall.
You're not applying cold. FSC First knows you through this program. That relationship is an asset — use it.
For every $1 in debt payments, you need $1.25 in net operating income. Today we'll build the financials that prove this number.
Financial Statement #1
The P&L (Income Statement) tells the story of your revenue minus expenses over a period. FSC First uses this to calculate your net operating income — the numerator of your DSCR equation.
| P&L Structure — What FSC First Looks For | |
|---|---|
| Revenue / Sales | Total income from business operations. Consistent or growing is ideal. |
| – Cost of Goods Sold (COGS) | Direct costs to deliver your product/service. Lower ratio = healthier margins. |
| = Gross Profit | Revenue minus COGS. Shows core business profitability. |
| – Operating Expenses | Rent, payroll, utilities, marketing, insurance, etc. Must be reasonable and documented. |
| = Net Operating Income (NOI) | This is the number that matters. It's the top of your DSCR fraction. |
| – Taxes, Interest, Depreciation | Below-the-line items. Important but FSC First focuses on NOI. |
| = Net Profit / (Loss) | Bottom line. Positive is good, but NOI matters more for lending. |
They want to see consistency and trajectory. A business earning $15K/month consistently is more fundable than one earning $50K one month and $2K the next. Show at least 12 months of P&L history, ideally 24.
If you don't have a P&L, your CPA can generate one from your tax returns and bank statements. Bring what you have — Session 2 is about building what's missing.
Financial Statement #2
The Balance Sheet is a snapshot of what you own, what you owe, and the difference (equity) at a specific moment. It proves your business has substance behind the revenue.
Current Assets: Cash, accounts receivable, inventory — things you can convert to cash within a year.
Fixed Assets: Equipment, vehicles, property — long-term value. Include depreciation schedules.
Current Liabilities: Accounts payable, credit card balances, loan payments due within a year.
Long-term Liabilities: Loans, leases, notes payable beyond one year. These feed your DSCR denominator.
Assets – Liabilities = Equity. This shows your skin in the game. FSC First wants to see positive and growing equity. If equity is negative, that's a red flag to address.
Looking Forward
Projections show FSC First where your business is going. They need to see that the loan you're requesting will generate enough cash flow to repay it — with margin.
| Element | Credible Approach | Red Flag Approach |
|---|---|---|
| Revenue Growth | 10-25% annual, based on existing contracts or pipeline | "We'll 5x revenue in Year 1" |
| Expense Ratios | Consistent with industry benchmarks and your history | Expenses magically shrink while revenue triples |
| Seasonality | Reflects actual seasonal patterns in your business | Every month identical — unrealistic |
| Loan Impact | Shows exactly how funds generate additional revenue | Revenue grows but no connection to how loan is used |
| Contingency | Includes conservative, realistic, and optimistic scenarios | Only shows best-case scenario |
Know the loan payment you're requesting, multiply by 1.25, and that's the minimum NOI you need to project. Build your revenue and expense assumptions to reach that number credibly. If you can't reach 1.25x DSCR with reasonable assumptions, the loan amount needs to adjust.
The Story Behind the Numbers
Numbers without a narrative are just guesses. FSC First needs to understand the why behind every number in your projections. This is where most applicants fail — and where you'll stand out.
• How many customers/contracts do you have now?
• What's your average deal size?
• What's your current close rate on leads?
• What's the realistic pipeline for new business?
• Are there signed LOIs or contracts in hand?
• What's the seasonal pattern?
• What are your fixed costs (rent, insurance, software)?
• What varies with revenue (materials, commissions)?
• What new hires are planned and when?
• What one-time costs come with the loan (equipment)?
• What industry benchmarks support your margins?
• What's your contingency buffer (5-10%)?
Most applicants hand over a spreadsheet and hope for the best. You're going to hand over a spreadsheet with a 2-3 page narrative explaining every assumption, citing your actual business data. That's the difference between "maybe" and "approved."
The Number That Decides Your Loan
Cash flow is not the same as profit. You can be profitable on paper and still run out of cash. FSC First wants to see that you manage cash flow intentionally — not reactively.
| Cash Flow Statement Structure | |
|---|---|
| Operating Activities | Cash from day-to-day business: customer payments in, vendor payments out. This must be positive. |
| Investing Activities | Cash for equipment, property, or other long-term investments. Usually negative (spending). |
| Financing Activities | Loan proceeds in, loan payments out, owner contributions/draws. This is where your FSC First loan shows up. |
| = Net Cash Flow | The change in your cash position. Positive = cash growing. Negative = cash shrinking. |
• Invoice immediately — don't wait
• Negotiate net-15 or net-30 terms with customers
• Stretch payables to net-45 where possible
• Maintain 2-3 months operating reserve
• Track weekly, not just monthly
• Frequent overdrafts or negative balances
• Paying personal expenses from business account
• Large unexplained cash deposits
• Revenue trending down 3+ months straight
• No pattern — chaotic deposits and withdrawals
Interactive Tool
Enter your numbers below to calculate your Debt Service Coverage Ratio. This is the exact calculation FSC First uses to determine your loan capacity.
Formula: DSCR = Monthly NOI ÷ (Existing Debt + New Loan Payment)
Target: 1.25x minimum. Below 1.0x means you can't cover payments from cash flow. Between 1.0-1.25x means tight — FSC First may counter with a smaller amount.
Interactive Assessment
Click each item to cycle through: check_circle Ready → warning Needs Work → cancel Not Started. Yellow and red items show fix-it steps.
Profit & Loss covering at least last 12 months, ideally 24
Assets, liabilities, and equity as of this month
Year 1 month-by-month and Year 2 annual P&L projection with assumptions
Monthly cash flow statement showing operating, investing, and financing activities
2-3 page document explaining every revenue and expense assumption in projections
Specific dollar allocation showing exactly how loan funds will be used and ROI timeline
SBA Form 413 — lists all personal assets, liabilities, income, and contingent liabilities
Find Your Fit
Now that you understand your financials, match your situation to the right FSC First program. Click any card to learn more.
Core lending program. Flexible terms, competitive rates. Ideal for growth capital, equipment, and working capital.
Very Low Threshold for businesses building credit history. Designed for startups and early-stage companies.
Real estate and major equipment. Low down payment (10%), fixed-rate, long-term. SBA partnership program.
Energy efficiency, solar, green technology. Special rates for sustainability-focused projects.
Non-repayable funding for technology adoption. Competitive and periodic — check eligibility.
Revolving Loan Fund for Bowie-area businesses. Low-interest, community-focused. BIC program priority.
The P&L, projections, and DSCR you build today aren't just for the application — they tell FSC First which program is the best match for your business stage and capital needs. Start the conversation →
Master Checklist
This is everything FSC First needs in your lending review package. Check off items as you complete them. Your goal: 100% before you apply.
Your Roadmap
You've completed both workshop sessions. Here's exactly what to do next to get your lending package submission-ready.
✓ Collect all tax returns (personal + business, 3 years)
✓ Download official bank statements (3 months)
✓ Get current Good Standing certificate
✓ Build or update your P&L (CPA or QuickBooks)
✓ Create your balance sheet
✓ Calculate your actual DSCR
✓ Build Year 1 monthly projections
✓ Build Year 2 annual projections
✓ Write your assumptions narrative
✓ Create use of funds breakdown
✓ Complete Personal Financial Statement
✓ Run the Document Readiness Diagnostic — target all green
Once your package is complete (18/18 on the master checklist), you're ready. You're not applying cold — FSC First knows you through this program. That relationship matters.
Apply: fscfirst.com/apply | Programs: fscfirst.com/learn/programs | Resources: fscfirst.com/learn/resources
FSC First Contact
Jasmine Forbes
fscfirst.com
Bowie BIC Program Manager
Raymond Green
301-383-1550 · bowiebic.com
Cash flow tells the story. Your documentation proves it. Your package gets you funded.