Small Businesses Whose Books Are Audited By Hired CPA’s Improve Their Chances Of Getting A Loan

Art By James SteinbergArt By James SteinbergJanuary 14, 2011
According to the The Wall Street Journal’s Angus Loten, small businesses who hire a certified public accountant to audit their books, rather than having the Internal Revenue Service do it, improve their chances of getting a loan. Additionally, they have a better chance of acquiring a loan on much better terms than businesses with less scrutinized financial statements.

“Banks love when you have audited financials because they view it as a form of insurance,” says Buzz Rose, a certified public accountant in Pittsburgh. “But audits have become very expensive and to have one done ‘just in case’ would seem to be a waste of time and money.”

Based on data from more than 10,000 closely held companies—about half of which have less than 500 employees—a study by the University of Chicago Booth School of Business found audited businesses save an average of $6,900 for every $1 million in outstanding debt every year as a result of lower interest rates, which were more than half a percentage point below rates paid by nonaudited businesses. For a loan of $3.3 million, the average size of loans analyzed in the study, the savings was about $23,000.

To learn more and read the complete article go to: Audits Add Shine to Firms