Truepine Business Funding, a small-business funding broker in Carson City, Nevada, explains how to build a cash flow projection for a business loan: start from actual bank balances, forecast receipts and payments by period, add the proposed financing and its payments, document every assumption and test a slower case. Lenders decide; a projection helps size the request honestly.
| What it shows | Cash in, cash out and ending balance, period by period |
|---|---|
| Starting point | The actual bank balance, not profit |
| Typical horizons | 13 weeks for short gaps; 12 months for loans and projects |
| Must include | The new financing and its payments |
| Make it credible | Written assumptions and a slower-case version |
| Free review | Nevada SBDC advisers can look over a draft |
Projection, budget or profit forecast?
A budget sets targets. A profit forecast estimates income and expenses on an accounting basis. A cash flow projection tracks only money moving through the bank account, on the dates it actually moves. A business can be profitable on paper and still run out of cash for a month because customers pay late or a large purchase falls due first. Lenders care most about that cash view, because loan payments are made in cash.
What a lender reads in a projection
- Timing: when the shortfall starts and when it ends
- Size: the deepest point of the gap, which is the real amount needed
- Repayment: whether receipts after the gap can carry the new payment
- Judgment: whether the assumptions look like the business's own history
- Cushion: how much room is left if sales come in slower than planned
Building it, step by step
- Start with today's actual bank balance.
- List expected receipts by period: customer payments, card settlements, deposits, and any other cash coming in. Use the dates money arrives, not invoice dates.
- List payments by period: payroll, rent, suppliers, insurance, loan and lease payments, taxes and owner draws.
- Subtract payments from receipts to get the net change, and carry the ending balance forward.
- Add the proposed financing as a receipt on the date it would arrive.
- Add its payments in every period they would be due.
- Check the lowest ending balance in the whole projection.
If the lowest balance is still negative after adding the financing, either the amount or the structure is wrong.
Assumptions to write down
Every number in a projection rests on an assumption, and a short list of them makes the projection believable. Note where each receipt figure comes from, for example 'average of the last six months of deposits', how long customers usually take to pay, which costs are fixed and which move with sales, and any one-time items such as an equipment purchase or a tax payment. A reviewer who can see the reasoning can trust the result.
Monthly or weekly?
A 12-month projection by month suits a term loan, equipment financing or an expansion, because the question is whether a new monthly payment fits for the life of the obligation. A 13-week projection by week suits a short gap, because a monthly view can hide a week in which payroll lands before a large customer pays. Many owners build both: weekly for the next quarter, monthly beyond. The 13-week worksheet gives a layout for the weekly view.
A simple hypothetical example
The figures below are invented for illustration and are not typical of any offer. A small contractor starts the month with $8,000 in the bank. Weekly payroll and materials are $6,000; a $20,000 progress payment is expected in week four.
| Week | Receipts | Payments | Ending cash |
|---|---|---|---|
| 1 | $1,000 | $6,000 | $3,000 |
| 2 | $1,000 | $6,000 | -$2,000 |
| 3 | $1,000 | $6,000 | -$7,000 |
| 4 | $21,000 | $6,000 | $8,000 |
The deepest point is week three, $7,000 short. A request of roughly that amount, plus a small cushion, repaid from the week-four payment, is coherent. A much larger round number is not, and the projection shows why.
Testing a slower case
Copy the projection and change one thing: push the largest expected receipt back by two weeks, or cut sales by a tenth. If the business still makes the payments in that version, the request is sturdy. If not, consider a smaller amount, a longer term or a line of credit instead of a lump sum.
Common mistakes
- Starting from profit rather than the bank balance
- Recording sales when invoiced rather than when paid
- Leaving out owner draws, taxes or existing loan payments
- Forgetting the new financing's own payments
- Assuming every month is the best month
Presenting it
One page is enough: the table, the list of assumptions and two sentences on what the money is for and how it is repaid. Free advisers at the Nevada SBDC can review a draft. When it is ready, the process page explains how we use it, and the request form starts the conversation. Other preparation guides sit in the resources section.
By Truepine Business Funding · Updated