Small business owners typically want or need a notice to reader prepared for them to get alternative financing. This is usually done by designated accountants, although one doesn’t have to be to provide a notice to reader.
What is a Notice to Reader
A notice to reader simply lets the reader know that the financial statements provided have not been audited in any way.
The figures are provided by the owner or management of the company in question and are assembled into something that resembles a profit and loss statement and balance sheet.
What a Notice to Reader isn’t
It is not an endorsement of the financial position of the company in question. It does not provide any assurance as to the accuracy of the financials.
No lender will ever lend money to a company based upon a notice to reader as it already says there is no assurance to the accuracy.
What are they use for?
Essentially they are a talking point to probe further into the company’s finances like accounts receivables, or purchase orders.
A lender may lend upon the strength of the receivables and purchase orders. These are usually secondary lenders that specialize in lending in this manner.
Who uses them?
Small businesses that do not qualify for conventional loans from “A” List lenders and do not have prepared financials.
Instead of getting a notice to reader, opt instead for prepared financials. It costs more to get accurate financials prepared, however, the choice of lenders increases.
Having accurate prepared financials does not guarantee a lender will lend, it just means that the financials are more reliable.
Mathew Jazenko is VP of Sales at MRJ Financial Solutions and can be contacted at 289-500-1978 or email@example.com