A balance sheet is one of the core financial statements a company produces. It shows, at a single point in time, what the business owns (its assets), what it owes (its liabilities) and the difference between the two, which belongs to the owners (equity).
The three parts
- Assets — things of value the company holds, such as cash, stock, equipment and money owed by customers.
- Liabilities — what the company owes, such as supplier balances, tax due and borrowing.
- Equity — what remains for the owners once liabilities are subtracted from assets.
Why it matters when borrowing
A balance sheet tells a lender a lot about the health of a business. It shows whether the company has more assets than liabilities, how much is tied up in stock or unpaid invoices, and how existing borrowing sits alongside everything else. A strong balance sheet can support a clearer affordability picture.
Credit Corp lends only to UK limited companies and LLPs for business purposes. When you apply, your financial statements help us understand the company so we can offer a facility that fits. If you are unsure how to read your own balance sheet, your accountant can talk it through with you.
See also: What does outstanding balance mean?, What is insolvency?, What is a repayment schedule?.