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The right financial information to help increase line of credit


An expanding international distribution company needed an increase in its line of credit. However, financial institutions struggled to understand the financial information they provided, which was their income statement and balance sheet exported directly from their accounting software. Without a clear understanding of the company’s financial standing, the bank cannot approve their request to increase its line of credit – which they needed to help cover certain business expenses. 

Signature Analytics’ Solution:

We prepared a Quality of Earnings report to simplify the company’s financials. This robust financial information package interpreted the results of the operations. The report included tables and charts, along with a discussion of trends and unusual items, to help the reader (i.e., financial institutions like the bank) better understand the business’s performance.

increased LOC with quality of earnings report
increases LOC identifying one-time charges

We clearly identified expenses that were one-time charges. Through discussions with the company’s management, we identified one-time expenses that were not expected to be incurred in the future. These expenses were “added back” to the net income and earnings before interest, taxes, depreciation, and amortization (EBITDA) to determine the company’s normalized results.

We adjusted EBITDA to reflect one-time expenses. This is a calculation that many investors and lenders use to evaluate a business; however, it had been difficult to calculate with the financial information previously provided by management. So we included the adjusted EBITDA calculation in the report.

increases LOC identifying one-time expenses
increases LOC ebitda analysis

We included graphs and charts to communicate results more clearly. Doing so helped articulate trending and overall business performance for the reader instead of merely providing the balance sheet and income statement.

ROI: Increased Line of Credit by 20%

Presenting the company’s financial information in this way allowed the bank to clearly understand the data and made them more comfortable with the business’s performance. This led to the company obtaining a 20% increase in its line of credit and improved its relationship with the bank.

Best Practices for Increasing your Line of Credit

  • Build credibility with banks by professionally presenting financials in a way that they can easily understand.
  • Interpret the financial information for the investor or lender instead of allowing them to develop their own conclusions.
    • Since management knows the business better than the reader, the results of operations must be explained thoroughly.
  • Don’t show too much or too little financial information. Voluminous information will likely go unread.
    • While not providing enough information can result in the investor or lender to make incorrect assumptions about the business.
  • Present financial information that represents the company in the most favorable light.
  • Anticipate and address the bank’s questions upfront.