Banks and lending partners calculate business cash flow by separating true sales deposits from transfers, reviewing balances and recurring debits, and comparing available cash with new payments. Cablecroft Capital Group, a small-business funding broker in Albany, Georgia, walks through a hypothetical Dougherty County retailer's month. Credit decisions and terms stay with the partner throughout.
Why a store makes a good example
Retail trade is Dougherty County's largest sector by count, with 431 employer establishments in 2023, 41.5 percent of them with fewer than five employees (U.S. Census Bureau, County Business Patterns 2023). A small store's bank account mixes card settlements, cash deposits, owner transfers and supplier payments, which is exactly the tangle a lender has to sort.
The hypothetical store
Picture an Albany, GA gift and home goods shop. In one month its account shows the following. All figures are invented for illustration and describe no real business.
| Item on the statement | Amount |
|---|---|
| Card settlements from the processor | $31,000 |
| Cash deposits | $4,000 |
| Transfer in from the owner's savings | $5,000 |
| Refund from a supplier | $600 |
| Supplier and inventory payments | $19,500 |
| Rent, utilities, insurance | $5,200 |
| Payroll | $8,400 |
| Existing equipment loan payment | $450 |
Step 1: Count only revenue deposits
A lender separates sales from everything else. The owner's $5,000 transfer is not revenue; neither is the supplier refund, strictly speaking. Loan proceeds, transfers between the business's own accounts and returned items are removed too. Here, revenue deposits are $35,000 rather than the $40,600 that came in. Owners who mix personal and business money make this step harder and slower.
Step 2: Look at balances, not just totals
Average daily balance, the lowest balance in the month, and any overdrafts or returned items tell a lender how close to zero the business runs. A store that dips negative before each payroll reads differently from one that keeps a steady cushion, even with identical sales.
Step 3: List the recurring debits
Existing loan payments, equipment leases and any merchant cash advance remittances are all fixed claims on future cash. Daily advance debits stand out on a statement, and a lender will count them. A merchant cash advance, which is not a loan, still reduces the cash available for anything new. In our example the only existing obligation is the $450 equipment payment.
Step 4: From the statements to the tax return
For larger requests, partners also start from net income on the business tax return and adjust it. Common add-backs are depreciation and amortization, which reduce taxable income without spending cash, interest on debt being refinanced, and clearly one-time expenses. Owner pay is treated in different ways by different lenders, which is why the same business can look stronger to one partner than another.
Step 5: Compare cash with the new payment
What remains after operating costs and existing debt is the cash that could carry a new payment. Many lenders express this as a ratio of available cash to total debt payments. Our hypothetical store's revenue month leaves about $1,450 after costs and the existing payment, a thin margin in that particular month, which is why lenders look across several months rather than one. Thresholds and methods vary by partner, and we do not quote them.
If the gap is short and dated, working capital may fit; retail store financing covers longer-lived store costs.
Tidying statements before a request
- Run business money through a business account only.
- Label owner transfers so they are easy to separate.
- Avoid overdrafts in the months before applying where you can.
- Know every recurring debit and what it is for.
- Keep the last two years of tax returns ready.
How a request travels shows when partners ask for statements, and Census figures for the county set retail in context.
By Cablecroft Capital Group · Updated
