Which documents the bank expects
Under section 18 of the German Banking Act the bank must have the financial situation disclosed once loans above €750,000 are involved; in practice it asks earlier. Standard: the latest annual accounts with balance sheet, profit and loss and notes, a current BWA with trial balance, a twelve-month liquidity plan and, for investments, the financing plan.
The most common mistake is age: accounts that still show the year before last in October raise more questions than any figure in them. That is why we schedule the year-end meeting at the start of the year so the accounts are done before the bank meeting.
Three ratios that carry the rating
Equity ratio: equity divided by total assets. Values from 20 percent count as solid in the German Mittelstand, from 30 percent as good. It falls when profits are withdrawn in full — the point where distribution policy and financing are linked.
Debt-service capacity: is the cash flow sufficient to cover interest and repayment? The bank roughly sets EBITDA against annual debt service; a factor below 1.2 triggers questions. Gearing: debt in relation to equity. If it rises while turnover is stable, the bank wants to know what the money was used for.
Two explanations to bring along
Every set of accounts has one line that stands out: a drop in result, a jump in other operating expenses, high receivables at the reporting date. Bringing the explanation in writing — special depreciation, one-off expense, large order with payment terms — saves the bank from guessing.
The second explanation concerns the future: what changes in the current year and what is in the plan? A plan with scenarios is more credible than a single target figure.
How we prepare the meeting
Four weeks before the date we assemble the report pack: accounts, BWA, ratio sheet with prior-year comparison, liquidity plan, explanation page. On request we attend the meeting and answer the questions about the numbers, so that you can talk about your business.
The outcome is rarely just a better interest rate. It is a shorter meeting, a faster approval and a bank that asks for fewer documents next time.
How this looks in your business is quickest to clarify in the initial consultation. Book an initial consultation.
