Net Worth: Your Financial Position in Business Lending
Understand how net worth is calculated, why lenders evaluate it, and how to strengthen your net worth for better financing.
What Is Net Worth?
Net worth is the difference between total assets and total liabilities—essentially what you would have left if you sold everything and paid off all debts. For business lending, lenders examine both personal net worth and business net worth as indicators of financial stability.
A higher net worth generally indicates lower risk and can improve loan approval chances and terms.
Calculating Net Worth
Net Worth = Total Assets - Total Liabilities
| Assets | Liabilities |
|---|---|
| Cash and investments | Mortgages |
| Real estate | Auto loans |
| Business ownership | Credit card balances |
| Vehicles | Student loans |
| Retirement accounts | Personal loans |
| Other property | Other debts |
Why Lenders Care About Net Worth
Net worth matters to lenders for several reasons:
- Indicates ability to weather financial difficulties
- Shows history of financial management
- Provides additional security beyond collateral
- Demonstrates capacity to inject more equity if needed
- Supports personal guarantee enforceability
Strengthening Your Net Worth
Building net worth before applying for financing can improve outcomes.
- Pay down high-interest consumer debt
- Maximize retirement contributions
- Build cash reserves
- Avoid major purchases before applying
- Accurately value real estate and investments
- Document all assets clearly
Lenders typically ask for a Personal Financial Statement (PFS) listing all assets and liabilities. Complete this form thoroughly—understating assets or omitting retirement accounts can hurt your application.
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Read more →Important Disclosure
Not Financial Advice: The information provided in this article is for general informational purposes only and does not constitute financial, legal, or professional advice. You should consult with qualified professionals before making any financial decisions.
No Guarantee of Financing: Liminal Lending Co. is a business loan marketplace that connects borrowers with third-party lenders. We are not a lender and do not make credit decisions. Submitting an application does not guarantee approval or funding. Loan terms, rates, and availability vary by lender and are subject to borrower qualifications and lender criteria.
Third-Party Lenders: All loan products are offered by independent third-party lenders. Liminal Lending Co. is an Independent Sales Organization (ISO) and receives compensation from lenders for successful referrals. Terms and conditions of any loan are between you and the lender.
Rate Information: Rates, terms, and fees mentioned in this article are estimates based on publicly available information and may not reflect current market conditions or specific lender offers. Actual rates depend on creditworthiness, business financials, and lender policies.
Information May Change: Financial markets, lending regulations, and economic conditions are subject to rapid change. While we strive to keep our content accurate and up-to-date, information in this article may become outdated. Always verify current rates, terms, program availability, and regulatory requirements with lenders and official sources before making financial decisions.