When applying for a loan, especially a business or commercial loan, lenders often ask borrowers to submit a Personal Assets & Liabilities Statement. This document gives lenders an overview of your personal financial situation by summarising your assets and liabilities. It helps the lender assess your financial stability and risk, which is key in deciding whether or not to approve a loan.
Lenders use your Personal Assets & Liabilities Statement to get a full picture of your financial health. They need to know:
Your Net Worth: This is the difference between your total assets and your total liabilities. A positive net worth indicates financial stability, while a negative net worth might suggest increased financial risk for the lender.
Your Debt-to-Asset Ratio: Lenders want to see how much of your assets are tied up in debt. A high level of debt compared to assets could raise concerns about your ability to repay additional loans.
Your Liquidity: Lenders check how quickly you can access funds to service your debt obligations. Liquid assets (such as cash and savings) are essential because they can be easily converted to cash if needed.
Lenders rely on your statement to evaluate your risk profile. A strong Personal Assets & Liabilities Statement shows you have a solid financial foundation, making you a more attractive borrower for lenders.
Your statement should include all assets and liabilities held in your name as well as those in any family trusts, special purpose vehicles, etc. that you control.
Assets are, put simply, what you own. You should include the following items on the list of assets in your Statement:
Cash and Savings
Include the total amounts held in bank accounts, savings accounts, cash management accounts and term deposits.
Liquid Investments
List all shares/stocks, listed trusts, exchange traded funds (ETFs), mutual funds, bonds, mutual funds and crypto that you own.
Superannuation and Retirement Accounts
Show the current balance of your superannuation, pension and/or retirement accounts.
Real Estate
Provide details of any properties you own, including the address and current estimated market value. If you hold investment properties, include the gross annual rental income you receive.
High Value Personal Property
Include high-value items owned such as vehicles, jewelry, art or other valuables.
Life Insurance Policy
Include the sum insured amount for any life insurance policy that will be paid out in the event of your death.
Business Interests
If you own a share in any private businesses, provide details and the estimated value of your ownership stake.
Liabilities are, put simply, what you owe to others. You should include the following items on the list of liabilities in your Statement:
Mortgage Debt
List the details of mortgages you have taken out on residential or commercial real estate and the balance outstanding.
Vehicle Loans & Leases
Summarise any loans or leases you have taken out on vehicles and the balance outstanding.
Credit Card Debt
Summarize the total balance payable and total credit limit on all credit cards you hold.
Student Loans
Provide the current balance of any student debts such as HECs, HELP or other student loans, whether owed to the government or financial institutions.
Personal Loans
Include the amount of any other personal loan debts not included elsewhere.
Margin Loans
If you have taken out margin loans to purchase exchange traded securities like shares/stocks, crypto, etc include the details and amounts owed.
Buy Now Pay Later Loans
If you have purchased goods on BNPL loans, include the amount owed in the Statement.
Tax Debts
Include the total amount of debts you owe to your country's tax office (ATO, HMRC, IRS, etc).
Other Liabilities
List any other outstanding debt or obligations such as legal settlements or unpaid bills.
Guarantees
Include the total amount of any financial guarantees you have provided to lenders on behalf of others.
To help you get started, we’ve created an easy-to-use Excel template for your Personal Assets & Liabilities Statement. Simply download the template, fill in your details, and you’ll have a professional, clear summary of your financial situation to provide to your broker and lenders.
