Glossary
Sources and uses of funds
The two-column table showing where every dollar of a deal comes from and where every dollar goes. If it does not balance, the deal has a hole.
In plain English
Sources and uses is the deal on one page. Sources: the loan, your cash contribution, any vendor finance. Uses: the purchase price, stock, equipment, duties, professional costs, working capital. The two columns must be equal, to the dollar.
The most common failure is not arithmetic, it is omission. Deals are routinely presented with no working capital line and no transaction costs, which tells an assessor the borrower is planning to run out of cash in the first quarter and does not know it yet.
Why a lender cares
This table is often the first page a credit assessor turns to, because a hole here invalidates everything after it. A sources and uses that balances, includes honest working capital and shows a real cash contribution answers three of the assessor's first five questions. It is the opening section of every model we build.
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