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.
Credicorp 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?.