ExcelBP guide

What does a credit committee read in a business plan?

1. The funding need, and what it pays for

The funding plan sets uses (equipment, opening stock, working capital, starting cash) against sources (own contribution, loans, grants). The two columns must balance. Working capital need is calculated (simplified formula) as stock + trade receivables − trade payables: the money tied up in the operating cycle before customers pay.

An underestimated need is a common cause of cash strain and of refusal: a committee prefers a fair amount backed by quotes to a tight request that will bring you back in six months.

2. Your contribution and how risk is shared

The bank looks at who shares the risk with it. In France, according to generally observed banking practice, the own contribution asked for is around 20 to 30% of the total need; the level varies with the bank, the sector and the guarantees, and is to be confirmed with your bank. In Morocco, self-financing is also required, at a rate set by each bank, to be confirmed with your bank. The contribution can be strengthened by an honour loan (prêt d'honneur): a personal, interest-free loan with no collateral, granted to the founder by a support network (in France, Initiative France or Réseau Entreprendre; in Morocco, Réseau Entreprendre Maroc), which strengthens the founder's equity in the bank's eyes. What matters is that the contribution appears clearly in the funding plan.

3. Repayment capacity: the DSCR

Each year the business must generate enough cash to pay the loan instalments, with a margin. The committee measures that margin with the DSCR (debt service coverage ratio): cash generated by the business ÷ debt service (interest and principal repaid in the year). The cash generated is measured as EBITDA less income tax, or as self-financing capacity (CAF, before working-capital changes). Below 1, the business does not cover its repayments; many banks look for around 1.2 to 1.3, depending on the bank and the sector, sometimes more for start-ups or cyclical sectors.

A DSCR above 1 over the year is not enough if cash runs short before the first repayments: that is why cash is also read month by month. The ExcelBP report shows the DSCR for each of the three years (EBITDA less income tax ÷ interest and principal for the year), marked “n.s.” when EBITDA is negative, and states the method used and its limits.

4. Guarantees

Banks often ask for security: a personal guarantee from the owner, a pledge over the business or its equipment, a mortgage on property. Some bodies guarantee part of the loan: in France, Bpifrance or France Active; in Morocco, Tamwilcom (formerly the Caisse Centrale de Garantie); other countries have similar schemes. Guarantees complement repayment capacity, they do not replace it: a business whose activity cannot pay the instalments remains fragile, however well secured.

5. Cash, month by month

An annual plan can show a profit and still hide the month the account goes overdrawn. A monthly cash forecast reveals that low point: the off-season, customer payment terms, stock to finance. The committee wants to see the tightest month and the cushion left at that moment.

6. Break-even

Break-even is the level of revenue at which the business covers all its costs. It is calculated as fixed costs ÷ contribution margin ratio, that ratio being the share of each unit of sales left once variable costs are paid. The report states the method used and its limits.

Do not confuse it with cash break-even: that one removes depreciation, which does not leave the bank account, but adds the loan principal repaid each year. It tells you when the business pays for its cash outflows, not only its accounting costs.

7. Assumptions that hold, and what happens if they move

Price, volumes, ramp-up, salaries, rent: every assumption must be explainable. Committees often ask "what if sales were lower?". A sensitivity analysis already worked out shows you asked the question before they did. The ExcelBP report includes a sensitivity analysis on the key assumptions, each one tested down and up.

Requirements vary by country and by bank: these markers describe common practice, not a rule.

See a report before you order

The ExcelBP report follows this reading order over eight pages: a five-figure summary, assumptions, three-year profit and loss, 36 months of cash with the tightest month, funding and break-even, sensitivity on the key assumptions, method. The report states the method used and its limits. To see this structure on fictional projects, browse the six examples.

Frequently asked questions