Personal Financial Statement

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Personal Financial Statement

A Brief Introduction About the Personal Financial Statement

A simple personal financial statement is a document that shows your net worth, which is the difference between your assets and your liabilities. Your assets are the items owned by you like your house, your investments, and so on. Your liabilities are the home or credit card loans taken by you. If you are looking for a business loan from a bank or a financial institution, the agreement will specify that this statement is provided for the consideration of the loan.

Banks will provide you with a fillable personal financial statement where all the details relating to your assets and liabilities will need to be entered. You can check a sample personal financial statement if you are wondering what a personal financial statement is. In case you are married, the joint personal financial statement of both you and your spouse will be required. Sometimes the lender will require a personal guarantee against the loan, so some assets will have to be pledged as collateral.

Who Takes the Personal Financial Statement? – People Involved

This statement is required when a loan agreement is signed between a bank or financial institution and the borrower. The bank or financial institution needs this document in order to assess the ability of the borrower to repay the interest and principal on loan sanctioned. Banks would also ask for certain personal assets as collateral to protect their interests.

Purpose of the Personal Financial Statement – Why Do You Need It?

It is necessary when a customer wants a loan from a bank. The bank would like to analyze the financial situation of the customer before extending a loan.

An SBA personal financial statement is a statement of an individual’s assets and liabilities. The difference between a customer’s assets and liabilities would provide the customer’s net worth. The home, car, or investments are the assets owned by a customer. A home loan, car loan, or personal loan are the liabilities owed by a customer.

The bank or financial institution will find out if you have the financial capacity to repay the loan, including both the principal as well as the interest, and this can be done by studying your personal financial statement.

The quality of your assets will be examined to see which asset or assets can be used as collateral.

Once the bank has analyzed your personal financial statement SBA and has verified the quality of your assets, if it finds that you are eligible, it will sanction the loan you applied for.

The form that you need to fill up might also require information about your annual income and expenses. To know how to fill up a personal financial statement, you should study a personal financial statement worksheet.

Contents of the Personal Financial Statement – Inclusions

This statement shows your net worth, which is the difference between what you own and what you owe. Every loan agreement between an individual and a bank must include the names of the parties to the agreement. The agreement should also include:

  • Date: The effective date of the agreement
  • Purpose of loan: The purpose for which the borrower is taking the loan needs to be indicated
  • Documents being provided: The borrower needs to provide a personal financial statement to the bank, which should ensure that the borrower qualifies for the loan
  • Collateral: The assets which have been verified by the bank to be provided as collateral against the loan
  • Amount of loan: If the bank finds that the borrower is eligible for the loan, then the amount of loan that the bank or financial institution sanctions will be stated
  • Tenure of the loan: The duration of the loan has to be mentioned
  • Interest rate: The interest rate, depending on the prevailing rate for the specific category of loan
  • Payment schedule: The detailed payment schedule for the loan needs to be provided
  • Prepayment clause: There should be a clause in case prepayment of the loan is allowed
  • Applicable laws: The applicable laws of the state in accordance with which the agreement is being drafted
  • Revocation: The events which will lead to revocation of the agreement
  • Extension: The provisions for extension of the loan under special circumstances
  • Amendment: Should the situation arise, provisions for amendment in the terms and conditions of the loan.

How to Draft the Personal Financial Statement?

Points to Consider While Preparing the Agreement

This document determines the creditworthiness of the customer who has applied for a loan from the bank or financial institution. While drafting an agreement for a loan against a personal financial statement, the following points need to be kept in mind:

  • Parties to the agreement: The names of the parties to the agreement and the relationship between them
  • The personal financial statement of the borrower, including a statement that the information provided by him or her is accurate. This declaration from the borrower is important as it is on the basis of this that the loan will be granted by the bank. The borrower might also need to provide information about his or her income, as stated in the income tax, through a personal financial statement worksheet in pdf.
  • Collateral by the borrower: The collateral being provided by the borrower will be verified by the bank or financial institution before being accepted, and the loan is sanctioned
  • Repayment terms: The repayment terms of the loan which include the frequency of repayment of EMI should be mentioned
  • Loan Amount: The loan amount is granted by the bank
  • Interest on the loan: The prevailing interest rate at which the loan is being sanctioned
  • Tenure: The tenure of the loan also needs to be mentioned

Negotiation Strategy

This statement will form the basis of negotiation of the terms of the loan being sanctioned by the bank or financial institution. You will be provided with a blank personal financial statement. The bank will verify the assets and liabilities as provided in the fillable personal financial statement in excel and offer a loan at a certain rate of interest and for a specified tenure. Before signing the agreement, the borrower can negotiate for the best terms depending on his or her creditworthiness.

Benefits & Drawbacks of the Personal Financial Statement


  • Security for the lender: The statement serves as proof for the bank regarding the credit standing of the borrower. Once the bank verifies the quality of the assets and liabilities of the borrower, the bank is satisfied that the loan being extended will not turn out to be a non-performing asset. The bank can also decide terms on which the loan is being granted to the borrower and decide which asset it wants to ask for collateral
  • Ease of getting a loan: If the statement provided by the borrower is genuine, then it will be easier for him or her to get a loan from a bank. The statement is a qualifying document for the borrower, and the loan is processed much faster than under normal conditions.


  • Discretion of the bank: The bank has multiple creditworthiness criteria to evaluate the eligibility of the borrower, and the personal financial statement is one of them. So even with a dependable net worth, a borrower may have to pay steep rates of interest, have a shorter repayment tenure and have a ceiling on the loan amount
  • The authenticity of the statement: The borrower might declare a false personal financial statement in a bid to get favorable terms and conditions of the loan. He or she might suppress material facts that pledging an asset as collateral.

What Happens in Case of Violation?

This is a statement that relates to an individual’s financial status as on a particular date and includes the personal assets and liabilities. It is taken as proof by banks and other financial institutions while extending loans to individuals and is considered as a very important document for loan eligibility(1).

The accuracy of the fillable generic personal financial statement depends entirely on the customer. Ensure that this statement in excel filled up by you is submitted as a personal financial statement in pdf for reasons of safety

The loan agreement where this statement is required as an attachment clearly states that ‘knowingly making a false statement on this form is a violation of the applicable laws of the state.’

So if the borrower has resorted to material suppression of facts while filling up the personal financial statement form and this comes to the knowledge of the bank, then the collateral will be sold to realize the loan amount. Apart from this, the borrower has to face whatever penalty the state decides.

When there is a violation of any clause of the loan agreement, then as per the terms of the agreement, the same will be considered null and void.

This is a crucial document when you want to take a business loan, home, or car loan.

This document is a statement of all your personal assets and liabilities.

The lender, which could be a bank or a financial institution, will consider your personal financial statement when it comes to extending a loan to you(2). However, along with this statement, the bank will want supporting documents from you to verify the credibility of your information.

If the statement is in order, then the bank will want collateral from you. This is a security to be provided in the event you default on the payment of an EMI on loan.

The information provided by you must be true and correct as per the declaration given by you.