Academic journal article Journal of Accountancy

New Forms Introduced for Small Business Loans

Academic journal article Journal of Accountancy

New Forms Introduced for Small Business Loans

Article excerpt

CPAs with small business companies and clients seeking bank loans may find it easier to meet lenders' information requirements.

In the past, most banks required financial statements conforming to generally accepted accounting principles to evaluate loan applications. However, many small businesses considered GAAP statements too costly to produce. A Business Credit Information Package (BCIP) currently can be submitted to bank loan officers instead.

The set of forms, developed by a joint task force of the American Institute of CPAs private companies practice section technical issues committee and Robert Morris Associates' (RMA's) accounting policy committee, helps bankers gather the financial and accounting information needed to evaluate loan requests in a cost-effective manner.

Judith H. O'Dell, a partner of Beucler, Kelly & Irwin, Ltd., Wayne, Pennsylvania, called the BCIP "a viable alternative to the full disclosure requirements of GAAP." She added, "With BCIP, bankers receive enough financial information to allow realistic analysis, and small business borrowers can satisfy their bankers' needs at a reasonable cost."

The BCIP can be requested in writing by banks for companies that previously would have submitted tax returns or compilations to support loan requests. …

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