How banks assess
At its core, a credit institution asks two things: can the company service interest and repayment from its ongoing income? And what happens if things turn out differently than planned? The answers follow from the debt service capacity, i.e. the ability to pay the loan instalments from the cash inflow generated, as well as from equity, collateral and the assessment of the founders and the business model.
For this purpose, banks have internal rating procedures that result in a classification of creditworthiness. The clearer and more complete your documents are, the better the bank can reflect your project in this procedure.
What belongs in a bankable package
The exact scope depends on the project, the loan amount and the credit institution. Typically, a complete package comprises the following components:
- Business plan with a comprehensible presentation of the project, market and team
- Integrated financial planning with debt service calculation
- Capital requirements and financing plan: what the money is needed for and where it comes from
- For existing companies: annual financial statements and current BWA (betriebswirtschaftliche Auswertung – management accounts) with trial balance
- Overview of existing collateral and existing liabilities
- CVs and evidence of qualifications of the founders
Preparing for the bank meeting
In the meeting, the bank above all wants to get to know the people in charge. It should gain the impression that you understand your figures, assess risks realistically and have made provision for deviations. We go through the questions to be expected with you and practise presenting the key messages.
It is also helpful to clarify before the appointment which financing components you are requesting and which collateral you can offer. The meeting then becomes an objective discussion rather than a collection of open points.
Our role
We prepare the documents and the meeting from a business management perspective. We do not broker loans and do not negotiate with the bank on behalf of the company. The credit decision is made solely by the credit institution. We discuss subsidies applied for via the principal bank in coordination with your bank.
Frequently asked questions
Will you accompany us to the bank appointment?
On request, we can take part in the preparation and – provided that you and the bank so wish – also attend the meeting in an advisory capacity. You remain the bank's interlocutor and contracting party.
What is debt service capacity?
It describes whether the company can make the agreed interest and repayment payments from its ongoing cash inflow. It is one of the most important parameters in any credit assessment.
Can you guarantee a loan commitment?
No. The decision lies exclusively with the credit institution. Good documents improve the basis of the assessment but do not replace it.