Preparing the Personal Net Worth Statement

Depending on the certification your business is seeking, you may be required to provide a personal net worth (PNW) statement. In many ways, the PNW is similar to your business’s balance sheet. It is a snap shot of your financial standing at a particular moment in time. It is used by certifiers to help determine social and economic disadvantage.

Most state unified certification programs or certificates offered by the department of transportation (DOT) require the owner’s PNW to be less that $750,000, excluding your ownership of the business being certified and the equity in your personal residence. Banks and other lending programs use the PNW statement to help determine the owner’s credit worthiness.

The US DOT is looking at changing the personal net worth limit for DBE owners, adjusting for inflation from the present $750,000 to $1.32 million. The current limit was set in 1989 and has never been adjusted.

Personal net worth is defined as the net value of an individual’s remaining assets after his/her total liabilities are deducted. An individual’s personal net worth includes only his or her share of assets held jointly or as community property with a spouse. You can always have your accountant complete the form, but you should understand what is being asked. Let’s break down some of the mysteries on the PNW form:

On the Asset side …

  • Cash on hand and in banks means that which is in your wallet and any checking accounts. Savings accounts are listed separately. I have always listed certificates of deposit separately under “other assets”, because they generally can’t be cashed immediately. You might want to ask your accountant’s advice on this issue.
  • Accounts & Notes Receivable are about who owes you money. For example, if you loaned your business money and established a promissory note or a loan document, the amounts would be listed in this category.
  • Life Insurance cash value is asking for the amount of money you would receive if you cashed your whole life policy in today, not the face value or the amount due to your beneficiary upon your death.
  • Stocks and Bonds refers to stock that you may own in your business and any other corporation or government and commercial investment bonds that you hold.
  • Real Estate is about the market value of your primary owned residence and any other vacation or investment properties. You’ll be asked to provide details about the mortgages in liabilities and in section 4 on page two.
  • Other Assets can include a variety of items such as: antiques, jewelry, art work, household goods, etc.

For Liabilities …

  • Accounts Payable is about who you owe money to – in promissory notes or non-bank personal loans, educational loans, etc. (auto loans and mortgages on property are not included in this group).
  • Notes Payable to Banks and Others includes personal credit lines, loans from financial institutions for things like furnace replacement, or major retail outlet accounts.
  • Installment Accounts is for your automobile and then for any other monthly account(s).
  • Loan on Life Insurance should include any money you have borrowed against your insurance policies.
  • Unpaid taxes is where you list taxes you know you owe for property or school taxes, or state or local income tax deposits that you need to make.
  • Other Liabilities can include a variety of items – such as money you owe that doesn’t fit conveniently into the primary categories on the form.

When calculating your net worth you’ll want to be conservative with the value estimates you make, particularly with your vehicle and home; inflating their value will not give an accurate picture of your net worth, especially if your calculations of are coming up with a negative net worth. Your net worth is determined by subtracting your liabilities (debts) from your assets. From your mortgage to student loans, car payments and credit card bills, and loans made to your company – since it is possibile to have more debt than assets, which is a negative net worth. If your net worth is negative,  you will need to be prepared to explain why.


  1. Andrew on May 5, 2011 at 12:09 pm

    I hadn’t realized that the government was thinking about increased the top value of an owners PNW. Inflation does seem to be abound at the present time and anyone thinking of certifying should be prepared, especially since the ‘limit’ is increasing. That makes it seem like more individuals may qualify for certification in the set-aside programs assuming they meet other criteria. I would also have to agree that it is much better to take a conservative approach to any estimates you might need to make when reporting PNW, particularly with regards to liabilities like monthly installment payments. And, as you pointed out, being in the black on total PNW is obviously a step up than someone who is in the red or shows a negative PNW. Good advice and solid information as is usually found on the GDC blog. Thanks!

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