If you paid for the inventory with a business loan then the cash from the loan would be listed as a business asset and cover the "loss" of paying out the inventory. Then any payments made against it would be counted against the business's gains. Obviously if you got the loan in say decemeber and the purchased inventory in January this would skew taxes from one year to another but should be proveable. In that case you would have an overstated income one year and an understated income the next. As long as it was proveable via paperwork the LO and UW could probably average the 2 years incomes.
But, if you did not claim the loan as an asset/cash recieved and were just expecting to write off all the payments you made with the loan and the payments you will make to pay it back, then something is not right. Whether it is the case or not, it looks like hiding a cash infusion to minimize taxable income and they will not allow that income to be included.
Also, as SE, if you posted last years income as a negative number there is little chance that anyone will loan in this market. As Dallas always says..."think have your cake and eat it too" If the inventory was paid for out of a loan, the only part that should have actually affected the business "income" would be any payments made on the loan
To simplify, your "actual" income is the same as your tax income, they are not different no matter how you want to phrase it. You cashflow may be differnet, but income is the amount of money that the government taxes you on. And unfortunately that is what lenders are required to go by. If you use accounting rules or weird accounting procedures to declare the minimum in actual business income, then you do it at the cost of having proveable income. In this market, you would most likely need to have 680 - 700 FICO and 10-20% down to come close to finding a lona for this. In any case, good luck with it and I hope you get it figured out.
