If assets are required for your loan application, your liabilities can be one the most needed requirements too. You are so confident declaring all your assets; your house, your cars, and business, but what about your liabilities?
Liabilities are the conditions that you are being accountable for. This means that you have a responsibility to face and solve them as soon as possible before you get into so much trouble.
If you are a business owner, having a business is an asset. But you may have to check also what money you owe to the vendors, to your employees, and even to the government. One of the requirements is that you need to keep track of your business debts. You may ask the head of the financing department to track that record for you. This can be incurred in your daily business operations. Liabilities can fluctuate daily, so the more money you owe to those people and the organizations the higher your liabilities are.
Liabilities can be an easy process for purchasing services and good because you might have yo pay them later, and you get to use the items on the same day you ordered it. This has to wait until the due date.
This can also help in financing your business needs. Some of the factors that you must not ignore include the interest. They may charge you high interest, but it depends on the company that you wanted to apply for a loan.
Some common examples of liabilities are loans, accounts payable, mortgages, deferred revenues, accrued expenses.
Deferred revenues are the advance payments of your customers. Examples are checks or cash. Accrued expenses are recognized in your books before it is paid. These can be different kinds of liabilities that you need to know if you own a business.
Liabilities have two types which are the short term and the long term;
Short term liabilities refer to current liabilities, these examples are your supplies, utilities, invoices, wages, and accounts payables.
Long term liabilities refer to non-current liabilities. You are paying for it for longer than one year. Examples of these are mortgages, deferred taxes, accrued expenses.
If your loan officer asks you to list your assets, and liabilities, make sure that it’s detailed and accurate. Because they may have third party sources to investigate all your current debts on different companies that you owe for. For easy and faster processing you may hire a credit loan officer to make sure that you are on the right track.