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Cash Flow User Guide – SAM Method Page 1 of 29 Table of Contents Cash Flow User Guide SAM Method
Cash Flow User Guide – SAM Method
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Table of Contents
Cash Flow User Guide
SAM Method
Cash Flow User Guide – SAM Method
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Introduction .................................................................................................................................... 3
Objectives ........................................................................................................................................ 3
General Features ............................................................................................................................. 4
Default Two Year Average ........................................................................................................... 4
Repeatable Groups ...................................................................................................................... 4
“X” Exclude from Calculation ...................................................................................................... 5
Manual Override ......................................................................................................................... 6
Red Formatted Cells .................................................................................................................... 7
Source Document Referencing.................................................................................................... 7
Recurring and Non-Recurring ..................................................................................................... 7
Tabs on your workbook ................................................................................................................... 8
Cover Page................................................................................................................................... 8
Summary Sheet ........................................................................................................................... 9
Transcripts Comparison ............................................................................................................ 10
Income Calculation Worksheet ................................................................................................. 11
Main Sheet ................................................................................................................................ 12
Schedule C - Sole Prop. ............................................................................................................. 13
Schedule E Rental Income Worksheet (For Schedule E or Form 8825) .................................... 16
Schedule F - Farm Income ......................................................................................................... 19
Trust Income Analysis................................................................................................................ 21
Partnership 1065 ....................................................................................................................... 23
S Corporation (1120S) ............................................................................................................... 25
Corporation Income Analysis .................................................................................................... 27
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Introduction
Welcome to the Cash Flow Analysis User Guide - SAM Method. If you looking for
documentation on how to upload and download documents from LoanBeam, please refer to
www.help.loanbeam.com This guide will assist you in understanding how the cash flow is laid
out, highlighting some specific features that may be built for your firm.
Objectives
After reviewing this guide, you will get familiar with:
1. LoanBeam Cover Page, Summary Sheet and the cash flow summary page called the
“Main Sheet”
2. How to enter Wages from Pay Stubs in “Income Calculation Worksheet” tab
3. Reviewing details of each entity like for Transcripts Comparison, Schedule C - Sole
Proprietorship, Schedule E – Rental and Schedule F – Farm
4. Trust Income, Partnership (1065) and S-Corporation (1120S) Income from K-1’s and
Adjustments from corresponding Form 1065 and Form 1120S.
5. Income from Corporation (Form 1120)
First, let’s understand how some basic features will work, like:
1. Default Two-year Average
2. Repeatable Groups
3. Exclude from Income
4. Manual Override
5. Source Document Referencing
6. Recurring/Non-Recurring Dropdown
Icons Defined
Keys Key aspects of critical features
Tip Best practices and shortcuts
Notes Information about features
Caution Important warnings about a feature
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General Features
Default Two Year Average
This workbook includes the automatic calculation of 2 year (24 month) averaging. The workbook
compares the Current Year (CY) income to Prior Year (PY) and computes more conservative
value based on the trend i.e. if CY is lower than PY, then it will choose CY and if CY is greater
than PY, then it will use the 24 month average as a ‘default’ value. However, the default value
can be overridden using the dropdown. See below:
Repeatable Groups
LoanBeam’s Repeatable Group approach means that no matter how many entities are in the tax
returns files, LoanBeam will dynamically create as many repeatable groups as required to
present all of the entities. Whether there are two Schedule C entities or nine, the one worksheet
will present them all. The totals from individual entities appear at the top, which flow back to the
“Main Sheet”. In the Main worksheet, Schedule C income will be included in corresponding
Current and Prior Year columns and QI (Qualifying Income) columns as applicable.
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“X” Exclude from Calculation
To exclude the income related to a particular entity, type “X” in the box as shown. The amounts
will be excluded from the total income calculations and grayed out, showing the entity was
considered in the analysis.
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Manual Override
Manual override columns are provided on all sheets. These may be used to amend or remove
numbers. The figures entered in the Manual Override column will show up in the column for
Annual Figures adjusting the Monthly Figures (wherever applicable) accordingly.
There are three ways to use the Manual Override:
Input a specified dollar amount
Input $ 0 to force a zero dollar amount
Delete an override to return to the original amount
Never change the data in the CY and PY columns. When a user changes a number in
the current year or prior year columns, the formulas in those cells will be corrupted,
creating a potential disconnect with the rest of the calculation.
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Red Formatted Cells
Overriding a cell calculated by LoanBeam results in Red Formatted cells. This creates a
potential disconnect with the rest of the calculation and the relating cells are also formatted in
red.
Source Document Referencing
Each cell populated from a tax return provides details about the source, indicated by a red
triangle in the cell’s upper right corner. Hovering over the cell shows the dollar amount and
exact location of the data that was pulled from the tax return.
Recurring and Non-Recurring
There are Recurring/Non-recurring indicators that are set by default. The user can change the
setting by clicking on the cell and changing the selection from the drop down. Typically,
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Recurring numbers are included in the cash flow. Non-recurring numbers are excluded and
grayed out. See Main Worksheet below.
Tabs on your workbook
Cover Page
The first tab in the Excel Worksheet is the Cover Page. This shows the detailed Borrower
information that was uploaded by the user. LoanBeam also identifies business documents that
are missing from the Borrower. Based on current and prior year tax data, LoanBeam shows
what information the Borrower still needs to provide.
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For demonstration purposes, the Form 1040’s above are in separate files. That is not
required. Users can scan and submit at one time all of the Borrower’s documents in one
or multiple PDF files with any names. The forms may be submitted in any order (e.g. K-
1, 1040, 1120, K-1, etc.) It is required, however, that within each tax form, the pages are
in the same order they were produced (e.g. page 1, page 2, etc.).
Summary Sheet
The qualifying income from all the sheets in the workbook is presented on the “Summary
Sheet”. The Income Category column shows the description of the line item whereas the
monthly amount column populates the amount from the individual worksheets.
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Transcripts Comparison
On the transcripts comparison sheet, tax return information from submitted documents against
manually input tax return data from the user in matched. This easily alerts the Loan Officer or
Processor to any discrepancies in what was reported to IRS and submitted by the Borrower.
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Income Calculation Worksheet
Fixed Income Calculations or Salary Calculations as well as Variable Income Calculations for
Borrower and Co-borrower can be obtained from this sheet.
All the fields on these sheets are manual input fields. Manually enter the $ amounts and # of
units for wages depending upon the salary types (Hourly, Weekly, Bi-weekly, Bi-monthly,
Monthly or Annually).
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Main Sheet
The Main Sheet captures cash flow information from the Borrower’s tax returns.
While numbers from Form 1040 Page 1, Schedule A, Form 2106 etc., are populated directly on
the Main Sheet, information from multi-instance forms like Schedule C, Rental, Partnership etc.,
are broken-down into details on their own individual tabs and summary information is passed
back into the Main Sheet.
Example of a Schedule C (multi-instance form)
Clicking on the link for “View Breakdown” will take you to the Schedule C detail sheet.
For each amount populated on the main worksheet from multi-instance forms,
breakdown for amounts can be viewed.
Inside the Main Sheet, there are three additional columns for your Cash Flow Analysis –
Qualifying Income (Annual), Qualifying Income (Monthly) and 2 Yr. Avg. or CY.
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“Qualifying Income (Annual)”compares the Current Year (CY) income to Prior Year (PY) and
arrives at the most conservative value based on the trend. For example, if CY is lower than PY,
then LoanBeam will use CY. If CY is greater than PY, then LoanBeam will use the 24 month
average (e.g. CY + PY divided by 2.). “Qualifying Income (Monthly)” is Qualifying Income
Annual divided by 12. The right hand column displays which approach was used for Qualifying
Income.
Fields highlighted in aqua blue are manual entry fields.
Schedule C - Sole Prop.
This form populates from Schedule C form of the Tax Returns. If there are multiple entities in
the Tax Return for this Form then LoanBeam creates repeatable groups to represent each entity
individually on the same Schedule C worksheet.
Verify the amounts populated from the Borrower’s tax returns.
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In case the amounts need to be changed, the Manual Override columns provide space to enter
the corrections. The total annual and monthly QI figures will change accordingly.
There is space in the Notes section to comment on the reason for manual override or any other
changes made in the worksheet. To exclude the income from the income calculation type “X” in
the box provided as shown in the image.
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If it found that there is 20% or more than 20% change in income for an entity then a note
indicating that current year transcripts are required is displayed.
The calculated total from all the entities on this form is represented at the top of the sheet and
this amount flows to the Main Worksheet.
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Schedule E Rental Income Worksheet (For Schedule E or Form 8825)
This sheet populates the amounts from the Schedule E Rental and Royalty Income and Loss of
the Tax Return. Repeatable groups are automatically created if there are multiple entities.
Rental Income (Loss) Calculation
The Rental Income (Loss) amounts from the borrower’s/co-borrower’s tax returns are populated
here. By default Conventional Method is used for QI calculation. You choose to calculate the QI
using Government Method.
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If you opt to choose the Government Method then the fields related to the Conventional
Calculation are grayed out indicating that these amounts are excluded from the calculation as
shown below:
The number of months for QI calculation of a Rental property is considered to be “12”. This can
be changed manually.
Number of months cannot be more than 12.
The fields for “Monthly Mortgage Payment - P&I” and “Monthly Insurance, Maintenance, Taxes
& Misc. (e.g., HOA Dues, Flood, etc.)” are manually input fields. Input the amounts directly in
these fields.
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Royalty Income (Loss) Calculation
Royalty Income (Loss) Calculation is also obtained from this sheet.
Repeatable groups are automatically created if there are more than one entity.
The total calculated from all the entities on this sheet flows to the top of this sheet. This
calculated total for Schedule E Sup. Inc. and Loss which flows to the main worksheets is used in
the QI calculations.
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Schedule F - Farm Income
The Schedule F worksheet helps in the analysis of borrower’s Farm Income. All the data from
the Tax Return that helps in the QI Analysis is captured and populated in the CY and PY
columns.
Verify these amounts with the amounts on the Tax Return. If any of the amounts do not match
or you want to manually override the amounts, then use the columns provided for manual
override.
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LoanBeam automatically calculates the Schedule F Total Net Farm Income, Qualifying Income -
Annual and Monthly. If there is a 20% or higher percentage change in the income then a note
will be displayed.
To exclude the income from calculation type “X” in the cell provided for “X” to exclude income
from calculation.
The calculated QI for all the entities is represented at the top of the sheet and this amount flows
to the main worksheet.
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Trust Income Analysis
The Trust Income that is used in the QI Analysis flows to this sheet from the Tax Return.
The Trust Name, EIN # and Beneficiary Name are also populated on this sheet. Verify all the
figures populated from the Tax Return. To manually override use the columns provided for
manual overrides. Overriding the amounts directly in the CY and PY columns will corrupt the
formulas in those cells. Include notes in the notes section for such manual overrides.
If required, make adjustments to the income in the cell for “Other Adjustments” (shaded in aqua
blue).
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Type “X” to exclude income from the calculation in the cell provided for the same.
The Total Income (Schedule K-1) is analyzed and is displayed at the top of the sheet. This
amount flows to the main worksheet.
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Partnership 1065
The Partnership 1065 worksheet populates the borrower’s Income from K1s and Adjustments to
the income from the Partnership 1065 form of the Tax Return. Partnership name and Partner’s
name also populate for each entity appearing on this sheet.
LoanBeam automatically chooses the best suited method of calculation – Traditional Method or
Distributed Method. You can change the selection from the dropdown. If you choose to change
the original method a message indicating the same will be displayed on the worksheet.
The fields related to the method that is unselected will be grayed out and will not be considered
in the calculation.
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Verify all the figures populated from the Tax Return.
The ownership percentage is multiplied and the QI calculations are generated. While Capital
Ending is the default value, the cell offers a drop down to select other values from the K-1.
The total from this sheet is presented at the top of the sheet and the amount for Partnership
Total Income flows to the main sheet.
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S Corporation (1120S)
S Corporation income is automatically calculated on this sheet from Form 1120S.
LoanBeam automatically chooses the best suited method of calculation – Traditional Method or
Distributed Method. You can change the selection from the dropdown. If you choose to change
the original method a message indicating that the original method has been overridden will be
displayed on the worksheet.
The fields related to the method that is unselected will be grayed out and will not be considered
in the calculation.
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Verify all the figures populated from the Tax Return. If the amounts do not match, then use the
Manual Override columns and provide a reason for the changes in the “Notes” section.
Manually input the Wages paid from S Corporation to the Borrower in the cell highlighted in
aqua blue.
The calculated QI for each entity is presented on the sheet along with the total calculated QI for
all the entities flows to the top of the sheet. The S. Corporation total income flows to the main
worksheet.
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Corporation Income Analysis
The CY and PY amounts (if available) from the Tax Return are used in the Qualifying Income
analysis on this worksheet.
Verify all the amounts populated from the Tax Return. If any of the amounts need to be changed
then it should be done in the columns provided for manual override.
Enter the amounts for Line 26 “Amortization” from the Tax Returns manually in the cells
provided to enter the amounts. The “Wages” amount and the “Multiplied by Ownership
Percentage” fields are also manually input fields.
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Input these amounts directly into the cells provided to enter these fields (shaded in aqua
blue) and not in the manual override column.
Once the ownership percentage is entered the QI calculation is done depending upon the
ownership percentage.
The amount for Line 17 “Mortgages or Notes Payable in Less than 1 Year” is selected to be
recurring if it is available for both years and is considered in the QI calculation. You can select
this amount to be non-recurring. Upon selecting the amount as non-recurring, it will be grayed
out and excluded from QI calculations.
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The total QI analysis is done based on these figures. If there are multiple entities then total from
all these fields is represented at the top of the sheet. The amount represented at the top of the
sheet flows to the main Worksheet.
