The short answer
A bank does not finance the idea, it finances the ability to repay. Every document and every argument in the meeting answers the same question: what services the debt, and what happens if things go worse than planned?
Whoever can evidence that is negotiating terms. Whoever cannot is negotiating collateral — or nothing at all.
A note for readers outside Germany
Three things about German bank lending surprise finance teams run from abroad, and all three shape the preparation.
- The Hausbank is a relationship, not a transaction. German mid-market lending runs through a primary bank, and much of the market is regional savings banks (Sparkassen) and cooperative banks (Volksbanken) alongside the private ones. Shopping a term sheet around works less well than in an Anglo-American market, and a bank that has never seen your figures will not move quickly.
- Promotional loans go through that bank, not around it. Development funding from KfW and the state promotional banks is not applied for directly. Under the Hausbank principle the application runs through the house bank, which makes its own credit decision and carries part of the risk. The preparation is therefore identical — only the timetable gets longer.
- The paperwork is a legal duty on the bank. German banking law obliges lenders to obtain and review the borrower's financial disclosures above a certain exposure. So the demand for annual accounts and interim figures is not a preference and not negotiable goodwill — supplying them late puts the bank in an awkward position, and that shows up in the terms.
One vocabulary item: the BWA (betriebswirtschaftliche Auswertung) is a standardised monthly management report produced by the tax adviser, usually out of DATEV, and every German bank asks for it by name and reads it without explanation. A group reporting pack in your own format is not a substitute; it has to be reconciled to something the bank recognises, together with the trial balance (Summen- und Saldenliste) that goes with it.
The documents
- Annual accounts for the last three years, ideally with one-off effects explained.
- A current BWA with trial balance, no more than two months old. A three-month-old management report is itself a statement about the finance function.
- An integrated plan for the current year and the two following — P&L, balance sheet and cash from one model.
- A short-term cash forecast; where the position is tight, the 13-week cash flow forecast.
- Use of funds. Exactly what the money is for, and when it goes out.
- Existing facilities with terms, maturities, collateral and covenants.
- Order book and customer structure, including dependence on large accounts.
- Shareholder structure and any shareholder commitments.
The metrics the decision turns on
Almost every mid-market credit decision comes down to four numbers:
- Leverage — net debt to EBITDA. The underlying question: in how many years could the business theoretically pay itself out of debt?
- Debt service capacity — operating cash flow against interest and amortisation, including the new facility.
- Equity ratio — the buffer before debt would be affected. Shareholder loans only count if they are formally subordinated; how that is done, and why the wording matters, is in subordination agreements and comfort letters.
- Working capital — how much cash is tied up in current assets and how stable that has been. The levers are in cutting working capital.
Calculate these yourself beforehand, using the definition that will appear in the eventual agreement. Hearing your own numbers for the first time in the meeting means losing control of what they mean. Where the group reports under IFRS and the German entity under HGB, settle which basis the metrics are measured on before anyone writes a term sheet — the difference is set out in converting from HGB to IFRS.
How to structure the meeting
A short sequence works best: starting position and business model in a few sentences, then the reason for the financing, then the numbers, then repayment and risks, and finally the specific request — amount, term, structure.
Two things carry more weight than any amount of polish. First, raise past variances yourself. Setting the last plan against actuals and explaining where and why it went differently builds confidence in the next plan. Second, bring a downside case. The question “and what if revenue comes in ten per cent lower?” is certain to arrive; answering it prepared is the difference between a conversation and an examination.
What begins afterwards
A commitment does not end the preparation, it starts the reporting obligation: submission deadlines for annual and interim figures, covenant tests, notification duties. How that is set up is in covenant reporting. Putting those dates in the calendar from day one avoids the single most common breach there is — the forgotten submission.
The typical mistakes
- Asking too late. Financing needed in four weeks is an emergency and is priced as one.
- Naming the requirement but not the repayment. Debt service is the actual question.
- A plan without derivation. Growth assumptions with no order book or sales logic behind them get cut across the board.
- Holding back bad news. What the bank finds later costs a multiple of what an openly named problem would have cost.
- Talking to only one bank. Without an alternative there is no negotiation about terms — though see the Hausbank point above: that is an argument for building a second relationship early, not for running a wide auction.
Common questions
How long does a credit decision take?
With complete documentation, typically four to eight weeks to a commitment; longer for promotional loans through the house bank or where several institutions are involved. Start three to six months before the money is needed.
What if last year was a loss?
A loss-making year is not an exclusion; an unexplained one is. What matters is the cause, the measures taken, and evidence that they are working — ideally visible in the current monthly figures.
Who should lead the meeting?
Management and the finance lead together: strategy and numbers belong side by side. Where the finance side is missing internally, an interim CFO or temporary finance lead often takes it.
Are promotional loans an alternative?
Often yes, but they generally run through the house bank, which still gives its own verdict and takes part of the risk. The preparation is unchanged; the timetable is longer.
What is a BWA and do we need one?
A standardised monthly management report prepared by the tax adviser, typically from DATEV. German banks ask for it by name and read it without needing an explanation. If your group reports in its own format, plan to reconcile that to the BWA and the trial balance rather than substituting for them.
Why does the bank want so much documentation?
Above a certain exposure, German banking law requires the lender to obtain and assess the borrower's financial disclosures. The request is a legal duty on the bank's side, not a matter of preference — which is why supplying figures late is more expensive than it looks.
Read on
- The 13-week cash flow forecast – the document that answers the cash question week by week.
- Covenant reporting to banks and debt funds – what starts once the facility is signed.
- Subordination agreements and comfort letters – what a shareholder can contribute to the equity picture.
- Cutting working capital – the lever that reduces the requirement in the first place.
- The first statutory audit in Germany – when audited accounts become part of the pack.
- Finance as a Service – when the preparation and the ongoing reporting are staffed externally.
Sources and status
Based on nugrow's mandate experience in financing discussions, and on German market practice for house-bank lending, promotional loans and bank disclosure requirements. Requirements differ by institution. As of September 2026. This article is an overview and does not replace financial or legal advice.
