The five documents that decide your rate

Credit and financing · for owner-run businesses

Owners tend to think a loan decision is about the business. It is really about the file. Two businesses with identical operations get different answers because one arrived legible and the other did not.

Nearly every decision starts from the same five documents.

1. The profit and loss, two years

Read for the trend before the total. An underwriter is looking at whether margins are stable, improving or sliding, and whether any single year looks unlike the others. If something unusual happened, say so in a covering note rather than letting them guess.

2. The balance sheet

This is where the surprises live. Receivables that never move, inventory carried at a value nobody has checked, loans from the owner, and accrued items that are really debt. A tidy balance sheet signals a business that knows its own position.

3. Bank statements, six months

The document that gets read most carefully, because it is the one you cannot dress. It shows the real rhythm of the business: how many days sit near zero, whether deposits match the revenue on the P&L, and what leaves the account daily.

4. The debt schedule

Every facility, the balance, the payment, the rate, the maturity and what secures it. Most owners do not have one, and assembling it is often the first moment they see the blended cost of their own borrowing written down in one place.

5. The payroll summary

Headcount and stability, and where the owner's own compensation sits. Coverage tests are calculated after the owner is paid, which makes the draw a live part of the decision rather than a detail.

The file is not paperwork. It is the argument.

What actually gets tested

• Coverage. Whether earnings comfortably cover the payments, including the new one.
• Leverage. Total debt against earnings, and whether it is inside what the lender's programme allows.
• Consistency. Whether the three statements agree with each other and with the bank.
• Concentration. How much of the revenue depends on one or two customers.
• Collateral and guarantees. What secures the facility and who is personally on the hook.

None of this is exotic, and none of it rewards optimism. It rewards a file assembled the way the reader thinks. That is what the free first look produces, whether or not you borrow anything at the end of it.