Can a Prospectus be useful as a source of financial information about a customer

Answer: Yes, a company that is in the process of selling stock usually must file a Prospectus with the Securities and Exchange Commission [the SEC]. This document includes a great deal of information including:

• Current and historical financial statements,
• A description of the future plans of the business,
• Relevant facts about the current operations,
• Management discussion and analysis of current operations
• Data about market conditions and competition
• Potential risk

Credit professionals can easily obtain a copy of a prospectus from a privately held company and use the information it contains to make better-informed credit decisions.