A loan application is rarely turned down because the company isn't profitable. It is turned down, far more often, because the information presented is not credible: numbers that change between documents, last year's accounts still not closed, a shareholder current account nobody can explain.
The bank's decision depends less on profitability than on trust in the information. And that part can be prepared — months in advance, not the week the money is needed.
What the bank assesses, and in what order
Simplifying what various analysts describe in similar terms, the assessment follows four questions, in this order:
- Can the company pay? Capacity to generate enough free cash flow to service the debt.
- Is the information reliable? Consistency between the accounts, tax filings and what is said in the meeting.
- What is the money for? A concrete purpose, with a justified amount and a suitable term.
- What guarantees repayment? Collateral, whether corporate or personal, and the track record.
The second question stops the most applications, and it is the only one that depends entirely on admin work.
The documentation that will be requested
| Document | Where to get it | When to prepare it |
|---|---|---|
| Accounts for the last two years and the annual IES filing | Accountant | Should already be done |
| Current-year trial balance | Accountant | Up to 15 days before |
| Tax authority no-debt certificate | Finance Portal | 1 to 2 months before |
| Social security no-debt certificate | Direct Social Security portal | 1 to 2 months before |
| Central credit register statement | Bank of Portugal | 2 months before |
| Cash flow forecast | The company | 2 months before |
| Permanent commercial registry certificate | Commercial registry | 1 month before |
The certificates take minutes to obtain when there are no debts. When there are, the timeline becomes whatever it takes to settle them or set up a payment plan — which is exactly why you request them early: to find the problem with time to fix it.
What to prepare months in advance
Closed accounts, with no surprises inside
Late accounts are the most immediate sign of a company that does not know itself. But the more common problem is not the delay: it's the line items nobody can explain in the meeting. A large figure under "other debtors," accruals and deferrals with no justification, inventory that hasn't moved in two years. Each one raises a question, and not being able to answer costs more than the figure itself.
A tidy shareholder current account
This is the single biggest blocker at family businesses. Personal transactions booked through the company, shareholder loans with no written agreement, withdrawals with no supporting document. To an analyst's eye, a messy shareholder account means the borrowed money could leave through the same door.
Tidying it up means formalising shareholder loans in writing, fully separating personal expenses from the company's, and settling old balances. It does not happen in a week.
The credit register statement
Bank of Portugal keeps the Central Credit Register, and any company can request its own statement. It is always worth checking before the bank does: it is where old defaults, forgotten guarantees and liabilities the manager no longer even remembers show up. Finding that out in the meeting is avoidable.
A written cash flow forecast
This is the document that most distinguishes a well-prepared application, and the rarest one. It shows the company knows what is coming over the next few months, that the amount requested has a basis, and that repayment fits within operations. Building one is within reach of any SME: the method is in 90-day cash flow forecast.
Mistakes that cost the application
- Asking for a round number with no breakdown. "A hundred thousand euros," undecomposed, reads as a guess.
- Asking for a short term on a long-return investment, and creating a cash-flow problem with the solution itself.
- Presenting numbers that differ from what is in the filed IES.
- Showing up with last year's accounts still not closed in September.
- Approaching a single bank, with no fallback if the answer is no.
Check your own case
- Last year's accounts are closed and the IES filed.
- There are no debts to the tax authority or social security, or a payment plan is being kept up.
- The shareholder current account is explained and documented.
- There is a written cash flow forecast for the next twelve months.
- You can justify the amount requested with a line-by-line breakdown.
Every "no" is a month of preparation still needed. Two or more, and it is worth postponing the application rather than risking it — a refusal gets recorded, and makes the next application harder.
Frequently asked questions
How far in advance should I start?
Two to three months for a standard application. If there are tax debts to settle or a shareholder account to tidy up, six months is more realistic. The worst time to prepare a loan application is when the money is already needed, because the urgency shows and it weakens your negotiating position.
Is it worth talking to more than one bank?
Yes, and in parallel. Two or three simultaneous approaches give you comparison on spread, term and required collateral, and avoid the company being dependent on a single answer. The information to prepare is the same for all of them.
Does the accountant handle this?
The accountant provides the accounts and filings, which are the foundation. The cash flow forecast, the justification for the amount, and tidying up the shareholder account are the company's work — it is one of the areas described in what your accountant does and doesn't do.
In summary
The bank funds credible information before it funds profitability. Closed accounts, clean certificates, an explained shareholder account, a checked credit register statement, and a written cash flow forecast are five documents that take two months to prepare and change the conversation — from a request into a proposal.