Profit and loss statement
Also called: P&L, income statement
A profit and loss statement summarizes revenue, costs, and expenses over a period to show whether a business earned a profit or took a loss.
A profit and loss statement, often called a P and L or an income statement, walks through how a business performed over a span of time such as a month, a quarter, or a year. It starts with revenue at the top, subtracts the cost of goods sold to reach gross profit, then subtracts operating expenses like rent, payroll, and marketing to reach operating income. After interest and taxes come out, what remains is net profit or net loss at the bottom, which is why people call it the bottom line.
When you apply for financing, the P and L is one of the first documents an underwriter studies because it shows whether the business actually makes money and how efficiently it does so. A lender follows the path from revenue down to net profit to see where margins are healthy and where costs eat into earnings. Steady or rising profit over several periods builds confidence that you can carry a new payment. The P and L also pairs with bank statements so the lender can compare reported earnings against the cash that genuinely flows through the business.
Common questions
How many years of profit and loss statements do lenders want?
It depends on the product. Smaller working capital options may ask for recent statements and a few months of bank records, while bank term loans and SBA loans often want two or three years of P and L statements plus tax returns. More history helps a lender see whether your profit is steady or swings sharply.
My P and L shows a loss. Can I still get funding?
Possibly. A single down period does not always end the conversation, especially if you can explain it, such as a one time expense or a slow season. Be ready to show how the business has recovered and how cash flow supports the payment you are asking for.
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