How to prepare a bank loan application

A loan application is more than a form. Your banker needs to be convinced of three things: the project is coherent, the business will be able to repay, and the risk is under control. A well-prepared file answers these questions before they are even asked.

What your banker looks at

• Repayment capacity: does the business generate enough cash to pay the instalments on top of its running costs?
• The owner's commitment: what personal contribution or equity is being put in?
• Consistency of the project: does the amount requested match a precise, justified need?
• Track record: for an existing business, the financial statements and how the bank account is run.
• Guarantees: security over financed assets, personal guarantee, public guarantees.

Repayment capacity, the heart of the file

The key question is simple: do the cash flows generated by the business cover the repayments? The self-financing capacity (net profit + depreciation, as a first approximation) is compared with the annual loan repayments.

Example: a MAD 500,000 loan over 5 years at 6% means a monthly payment of about MAD 9,700, or nearly MAD 116,000 a year. If your forecast self-financing capacity is MAD 150,000, the margin is real but tight. At MAD 250,000, the file is much more comfortable.

Documents to gather

For an existing business

• Financial statements for recent years (balance sheet, income statement);
• Recent interim accounts if the last balance sheet is several months old;
• Legal documents: articles of association, commercial register, tax identifiers;
• Recent bank statements;
• Quotes or pro forma invoices for the investments to be financed;
• A forecast and cash-flow plan including the new loan.

For a start-up project

• The full business plan (project presentation, market, strategy);
• The financial study: forecast income statement, financing plan, cash-flow plan;
• The CVs of the founders and their experience in the sector;
• Proof of personal contribution;
• Quotes, lease offers and customer letters of intent if you have them.

Consider guarantee and support schemes

In Morocco, public guarantees — notably those offered by Tamwilcom (formerly the Caisse Centrale de Garantie) — can ease access to credit for small and medium businesses, and support programmes for young companies exist. Conditions change: ask your bank about the schemes in force at the time of your application and include them in your financing plan.

Mistakes that sink an application

1. Asking for too little: forgetting working capital means going back to the bank a few months later, from a position of weakness.
2. Overly optimistic forecasts, with no cautious scenario.
3. Inconsistent figures between the income statement, financing plan and cash flow.
4. Leaving it to the last minute: financing is prepared months before it is needed.
5. Not being able to explain your figures: the banker is also financing the owner. Master your assumptions.

Presenting your file

Start with a one-page summary: the project, the amount requested, how it will be used, the desired term, the guarantees offered and the main indicators (revenue, EBITDA, repayment capacity). The detail comes next. A banker who understands your request in two minutes will review it in much better conditions.