File Diagnostic: Harbour Road Plumbing Ltd.

1. What the file says today

Revenue grew from $612,000 (FY2024) to $688,000 (FY2025), net income $54,000 to $61,000, with owner salaries of $65,000 each already expensed. The business is profitable, growing modestly, and carries one facility: a $42,000 equipment loan at $1,180 a month, current. Statements are accountant-prepared but the year end was December 31 and the interims stop at January 31, so the reviewer, and any lender, is reading a business that is seven months into a new year with one month of data.

2. The three ratios a lender will calculate

Working shown so you can reproduce each figure from your own statements. Thresholds vary by lender; these are common ranges for Canadian commercial lenders, not any lender's policy.

3. Findings, in priority order

1. Priority 1: the hire is not tied to revenue

   The request funds a $84,000 salary, and the file shows the cost but not the work. A lender will read the second coverage line above and stop. Fix: attach the quoted and contracted jobs the new plumber will complete in the first twelve months (the reviewer counted $131,000 of open quotes in the intake notes) and a twelve-month forecast showing the gap between the start date and the billing. This is the difference between a hiring loan and a payroll subsidy.

2. Priority 1: interims are seven months old

   January 31 figures in September read as either bad bookkeeping or something to hide. Produce an income statement and balance sheet to August 31 from the bookkeeping file. It does not need to be accountant-prepared.

3. Priority 2: the request does not match the documents

   The quote, upfit, and tooling total $96,000. The $180,000 request implies $84,000 for the hire, but the hiring plan does not state whether that is twelve months of loaded cost or something else. Restate the request as three lines with a document behind each, plus a named contingency, and let the total fall where it falls.

4. Priority 2: HST return one quarter late

   The intake says remittances are current; the balance sheet shows an HST liability larger than one quarter's activity. File the outstanding return before the meeting and bring the confirmation. If there is a balance, get the arrangement in writing.

5. Priority 3: owner contribution is not stated

   The trade-in of the old van is worth roughly $9,000 and the owners have put $12,000 of tooling on the company card this year. Both are contributions. Say so in the sources and uses.

6. Priority 4: no personal net worth statements

   Two owners, no PNW statements in the file. Both will be asked for. The Prep Kit has the template.

4. Document checklist for this request

5. Questions to expect in the meeting

• "Walk me through how the new plumber pays for themselves in the first year." Answer with the contracted work and the forecast, month by month.
• "What happens if the new work is 25% lower than you expect?" Have the downside case in the forecast, and say what you would cut.
• "Why is the HST balance higher than a quarter's activity?" Have the filed return and the confirmation in the appendix.
• "What are you putting in?" The trade-in and the tooling, stated in the sources and uses.
• "Are you both guaranteeing?" Expect it. Both PNW statements ready.

6. Recommendation

Close findings 1 through 4 and this file moves from Gaps to close to Nearly ready without any change to the business. The forecast in finding 1 is the one piece of work that takes real effort; if the owners would rather not build it, the 13-Week Cash-Flow Model ($249) is the right next purchase and nothing else is. Do not buy the presentation package until the forecast exists. Target meeting date: four weeks from now, after the August interims and the forecast are done.

This diagnostic describes the file. It is not a prediction of any lender's decision, and it is not legal, tax, or accounting advice. Figures marked as the customer's are as supplied and were not audited.