Bank Readiness
How a credit analyst reads these accounts, on the 12 months to Sep 2026.
Bank discussion memo
Automatic, from the figuresSample Trading Co is in a strong position to borrow: Debt service cover (DSCR) 6.10x and Debt to EBITDA 0.11x.
- • Debt service cover (DSCR): 6.10x. Each EGP 1 of yearly loan payments is covered by EGP 6.10 of operating cash profit (EBITDA after tax). Below 1.0x the business cannot pay its loans from trading.
- • Debt to EBITDA: 0.11x. It would take about 0.1 years of operating cash profit to repay all borrowing.
- • Net debt to EBITDA: -0.82x. Debt after using the cash on hand. Large cash beside large debt makes the bank ask why you borrow.
- • Resilience: sales could fall 32% before cash stops covering loan payments.
- • High cash alongside borrowing (Cash EGP 1.7M against borrowing EGP 201K). Be ready to explain why the cash is not used to cut debt (deposits held as security, customer advances, timing).
- • These figures support roughly EGP 2,684,909 more borrowing at 24% over 5 years.
- • High cash alongside borrowing: Cash EGP 1.7M against borrowing EGP 201K.
Your request
What you will ask for, tested the way the bank will test it. Overdrafts and revolving lines you already have are assumed renewed.
Request and loan terms
Example figures for the demo. Enter your own.Enter the amount you will ask for to see what it does to cover and leverage.
| Cash for debt each year (EBITDA − tax) | EGP 1,537,465 |
| Payments it supports at 1.25x cover | EGP 1,229,972 |
| Less today's interest and repayments (repayments estimated) | -EGP 252,000 |
| Extra loan by debt-service cover (24%, 5 years) | EGP 2,684,909 |
| Extra loan keeping debt at 3x EBITDA | EGP 5,311,631 |
| Estimated room to borrow (the lower) | EGP 2,684,909 |
Three-year view
Banks lend on the trend as much as on the last year. Each column is twelve months, a year apart.
| Measure | Sep 2026 | Latest year |
|---|---|---|
| Revenue | EGP 12.4M | – |
| Revenue growth | – | – |
| EBITDA | EGP 1.8M | – |
| EBITDA margin | 14.8% | – |
| Net profit | EGP 1.2M | – |
| Operating cash flow | EGP 1.5M | – |
| Borrowing | EGP 201K | – |
| Equity | EGP 2.3M | – |
| Debt service cover | 6.10x | – |
| Debt to EBITDA | 0.11x | – |
| Interest cover | 7.05x | – |
| Current ratio | 4.84x | – |
| Customer days (days) | 15 | – |
| Cash cycle (days) | 26 | – |
Only one complete year is loaded. Upload earlier audited statements to show the bank three years.
Stress test
What happens to loan cover if the year goes badly. Credit committees run tests like these before they approve.
Sales can fall 32% before cash stops covering loan payments; rates could rise more than 100 points.
| Scenario | EBITDA | Interest | Cover | Debt / EBITDA | Result |
|---|---|---|---|---|---|
As reported The last 12 months as they are. | EGP 1.8M | EGP 252K | 6.10x | 0.11x | Covered |
Sales fall 10% Variable costs fall with sales; fixed costs stay. | EGP 1.3M | EGP 252K | 4.56x | 0.15x | Covered |
Sales fall 20% A severe year: the test most credit committees run. | EGP 834K | EGP 252K | 3.01x | 0.24x | Covered |
Interest rates rise 3 points Egyptian loans mostly float with the Central Bank rate. | EGP 1.8M | EGP 259K | 5.95x | 0.11x | Covered |
Pound loses 20% against the dollar Imported costs (40% of cost of sales) rise 25%, before any price increase. | EGP 1.2M | EGP 252K | 4.02x | 0.17x | Covered |
Customers pay 30 days later The extra receivables are funded by overdraft. Extra cash tied up: EGP 1.0M. | EGP 1.8M | EGP 496K | 3.21x | 0.66x | Covered |
All at once Sales −10%, rates +3 points, pound −20%, customers 30 days later. Extra cash tied up: EGP 916K. | EGP 728K | EGP 506K | 1.44x | 1.53x | Covered |
What the bank checks
Ranges are common lender rules of thumb for small and mid-sized companies. Each bank sets its own limits, and collateral, sector and the owners' record also count. Open a row for what it means and what to say.
The first test of any loan: cash from trading against the yearly interest and instalments.
Debt service cover (DSCR)6.10x1.25x or moreStrong
Guide: 1.25x or more
What the bank sees. Each EGP 1 of yearly loan payments is covered by EGP 6.10 of operating cash profit (EBITDA after tax). Below 1.0x the business cannot pay its loans from trading.
What to do. Lead with this: it is the first figure a credit committee looks at.
(EBITDA − tax) ÷ (interest + loan principal due in 12 months)
Debt to EBITDA0.11x3x or lessStrong
Guide: 3x or less
What the bank sees. It would take about 0.1 years of operating cash profit to repay all borrowing.
What to do. Room to borrow: say so, and show how the new loan keeps this under 3x.
(short-term + long-term borrowing) ÷ EBITDA (12 months)
Net debt to EBITDA-0.82x2.5x or lessStrong
Guide: 2.5x or less
What the bank sees. Debt after using the cash on hand. Large cash beside large debt makes the bank ask why you borrow.
What to do. Explain the cash: customer advances, a payment due after the year end, or a deposit held as security.
(borrowing − cash) ÷ EBITDA (12 months)
Interest cover7.05x2.5x or moreStrong
Guide: 2.5x or more
What the bank sees. Operating profit pays the interest bill 7.1 times. At today's Egyptian rates this falls quickly when you borrow more.
What to do. Keep it: it shows the business carries its interest comfortably.
EBIT ÷ interest expense
Short-term assets against what falls due within a year, and whether long-term assets have long-term funding.
Current ratio4.84x1.2x or moreStrong
Guide: 1.2x or more
What the bank sees. Whether short-term assets cover what falls due within a year.
What to do. Present it with the ageing list so the bank sees the current assets are collectable.
current assets ÷ current liabilities
Quick ratio4.10x1.0x or moreStrong
Guide: 1.0x or more
What the bank sees. Liquidity without counting on selling stock.
What to do. No action needed.
(cash + receivables) ÷ current liabilities
Long-term funding surplusEGP 2,165,341Zero or moreStrong
Guide: Zero or more
What the bank sees. Long-term assets are funded by long-term money, as banks expect.
What to do. No action needed.
equity + long-term liabilities − non-current assets
Owners' equity is the cushion that protects the lender.
Debt to equity0.09x1x or lessStrong
Guide: 1x or less
What the bank sees. How much of the business is funded by lenders rather than owners.
What to do. Owners carry a fair share of the risk: mention it.
borrowing ÷ total equity
Liabilities to tangible net worth0.25x2.5x or lessStrong
Guide: 2.5x or less
What the bank sees. Banks remove goodwill and other intangibles from equity: they cannot be sold to repay a loan.
What to do. No intangibles to deduct.
total liabilities ÷ (equity − intangible assets)
Equity ratio80.3%30% or moreStrong
Guide: 30% or more
What the bank sees. The cushion that absorbs losses before lenders lose money.
What to do. Retaining profits instead of distributing them strengthens this year after year.
total equity ÷ total assets
Growth, margins and how much profit turns into cash.
Revenue growthn/a20% or more (inflation)Context
Guide: 20% or more (inflation)
What the bank sees. Needs twelve earlier months to compare with.
What to do. Explain what drives it and whether it lasts.
(revenue − prior 12 months' revenue) ÷ prior revenue
EBITDA margin14.8%10% or more (varies by sector)Strong
Guide: 10% or more (varies by sector)
What the bank sees. Operating cash profit on each sale: the source of loan repayments. Traders run lower margins than manufacturers.
What to do. Compare yourself with your sector when you present it, and explain any one-off costs in the year.
EBITDA ÷ revenue
Cash conversion83.7%70% or moreStrong
Guide: 70% or more
What the bank sees. 84% of operating profit turned into cash. Low conversion means profit is tied up in customers and stock.
What to do. Strong earnings quality: point it out.
operating cash flow (after tax, before interest) ÷ EBITDA
Days to collect from customers, sell stock and pay suppliers: the basis for a working-capital facility.
Customer days (DSO)15 days60 days or lessStrong
Guide: 60 days or less
What the bank sees. How long customers take to pay. Banks often lend against receivables but exclude balances over 90 days.
What to do. Quick collection: mention it.
average receivables net of VAT ÷ revenue × days
Stock days25 days90 days or less (varies by sector)Strong
Guide: 90 days or less (varies by sector)
What the bank sees. Slow stock may be obsolete; banks advance less against it than against receivables.
What to do. No action needed.
average inventory ÷ cost of sales before depreciation × days
Supplier days13 daysContext onlyContext
Guide: Context only
What the bank sees. Very long supplier days can mean the business is short of cash and paying late.
What to do. If suppliers give long terms by agreement, say so.
average payables net of VAT ÷ cost of sales before depreciation × days
Cash cycle26 daysContext onlyContext
Guide: Context only
What the bank sees. Days of trading the business must fund itself, and so the working-capital line it needs.
What to do. Size the working-capital facility you ask for from this cycle and next year's sales.
customer days + stock days + work-in-progress days − supplier days
Questions the bank will ask
Cash EGP 1.7M against borrowing EGP 201K.
Be ready to explain why the cash is not used to cut debt (deposits held as security, customer advances, timing).
Documents to prepare
- Audited financial statements for the last 3 years, with the auditor's report and notesThe base of every credit file; a qualified opinion or missing notes delays the decision.
- Management accounts for the current year to the latest monthShows the bank the business today, not only at the last year end.
- Aged receivables and payables lists (by customer and supplier)Banks discount old and concentrated receivables; an ageing list answers that before it is asked.
- Schedule of existing loans and facilities: lender, limit, balance, rate, repayments, securityMust agree with your iScore credit report; differences raise doubts.
- Bank statements for the last 6 to 12 months for every accountProves the turnover the accounts show actually passes through the bank.
- Cash-flow forecast for the loan period, monthly for the first yearShows how each instalment will be paid; build it from these figures.
- Commercial register, tax card, latest tax returns and VAT returnsLegal standing and proof that taxes are filed and paid.
- Fixed-asset register and any valuation reports for assets offered as securitySupports the collateral the bank will rely on.
- Profile of the owners and management, and the main customer and supplier contractsBanks lend to people and to dependable revenue as much as to numbers.
This page applies common credit-analysis tests to the figures in Sample Trading Co's books. It is not a credit decision or financial advice; each bank applies its own policy.