Building Financial Projections That Lenders Trust
By Juan Carlos Rosales de la Garza
When applying for a business loan, financial projections are not just a formality—they are one of the main tools lenders use to understand your business and make decisions. At the end of the day, projections help us build your projected cash flow, which is how we evaluate whether your business can realistically afford a loan. A common mistake we see is overly optimistic projections. It’s natural—everyone believes in their business and wants to show strong growth—but from a lender’s perspective, projections need to be realistic, not perfect. If the numbers seem too good to be true, it becomes harder to trust them.
Strong projections start with clear and reasonable assumptions. This means thinking through your revenue, but also your expenses. Many applicants focus heavily on sales and forget to fully account for fixed costs like rent, utilities, insurance, payroll, and debt payments. These are the expenses that don’t go away, even in slower months, and they play a big role in your cash flow. Another important factor—especially here in Denver—is seasonality. Not all businesses generate the same income year-round. Think about an ice cream shop in the winter or an outdoor business during colder months. These businesses can absolutely succeed, but only if they plan accordingly by adjusting revenue expectations and building reserves during stronger months.
Good projections show that you understand these cycles. They reflect both the high and low periods of your business and demonstrate that you have a plan to manage through them. Ultimately, projections are about trust—they tell the story of your business through numbers. When they are thoughtful, realistic, and well-supported, they help lenders feel confident in your ability to manage a loan and grow sustainably. If you’re unsure where to start, technical assistance can make a big difference. Taking the time to build solid projections today can significantly improve your chances of getting approved tomorrow.
Have questions about business lending or want to suggest a topic for next month’s column? Email Juan Carlos Rosales at jrosales@cedsfinance.org
About the Author: Juan Carlos Rosales de la Garza was born and raised in Mexico and is bilingual in English and Spanish. He holds a BA in Economics from the University of Texas and a Master’s in Finance from Harvard University. For the past three years, he has worked with CEDS Finance, gaining extensive experience in small business lending, underwriting, and entrepreneur mentoring.
