The Definition of Net Worth is “The Value of All Assets Minus the Liabilities of an Individual”.
A borrower must show on a Personal Financial Statement the funds required for a down payment (Cash Injection) and the funds required for the costs of the Loan (Appraisal, Environmental Report, Legal Research, etc.).
The Lender may also require additional collateral to qualify the Borrower for a loan. This is why it is vital to show all assets owned on a Personal Financial Statement. Assets owned by a Borrower may include real estate, stocks, bonds, certificate of deposit or whole life insurance with cash value, to name a few.
Ownership of other businesses is also an important asset. The net income from another business can be used as part of the overall cash flow available to pay for the new loan.