I was asked about where to show student loans when applying for a bank loan.

First, understand that your student loans are your personal responsibility, and they are not part of your practice.  If you don’t go into practice, you still must pay them back.  So student loans are not shown on any worksheets or financial statements related to your practice.

They do show up on your credit report, even if you are still in school or they are in deferrment, so you must show them as a liability/debt on your personal financial statement. Include the full estimated amount on the liability side.

Also include the monthly payment amount for your student loans on your personal monthly budget.  Show the amount even if you’re in deferment, so you can see what the effect will be on your budget, and how much you’ll need to take out of your practice for personal expenses.

Note:  To be sure you have all the information on personal assets and liabilities, use the SBA Personal Financial Statement form (HERE).

Another note:  Review your credit report to be sure you have included all current liabilities.  List all open credit card accounts with balances due.  You don’t have to list the ones that show a “0″ balance. 

For more information on personal financial preparation for business startup (and LOTS more information!), read Planning for Practice Success.

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