Business loan readiness and ratio analyser

What the business loan readiness and ratio analyser does

Lenders judge a request by a handful of ratios. Enter your revenue, profit, assets, liabilities, debt and the cash you have to repay it, and the analyser works out the current ratio, net margin, debt to equity, debt service cover and return on equity, compares each with a typical target and shows where you meet it and where you do not, before you walk into the bank.

Who it is for

Business owners preparing a loan or overdraft request, and advisers who assess a client's readiness for borrowing.

How to use the workbook

1. Enter your latest annual figures at the top.
2. Include the repayments on the new loan in the repayment figure.
3. Read each ratio against its target.
4. Fix the weakest ratios before you apply.
5. Save a copy under a new name for each month or year, so earlier records stay as they were.

What is inside

• Five ratios lenders use
• Typical target for each ratio
• Meets or below target status
• All inputs in labelled cells
• Chart of the ratios

The workbook has these sheets: Instructions, Ratios, Results. The main table has the columns Ratio; Your figure; Target; Result. Yellow cells are for you to fill in and grey cells calculate by themselves, so leave the grey cells alone. The example rows show how it works; type over them with your own entries.

Tips for getting it right

• Use audited or management accounts figures that you can support.
• Targets vary by bank and by sector; ask your lender.
• Include every loan in the debt figure.
• Improve the ratios that are easiest to change first, such as debtors.

Why keep this record

Running a business on memory works until it grows. Writing the numbers down turns opinions into facts you can compare month to month, and shows early which products, customers or costs deserve attention. Even a simple workbook, used every week, usually beats a sophisticated one that is opened once a year.

Questions people ask

Do I need to know Excel formulas? No. Type into the yellow cells and the rest is worked out for you. The formulas are visible if you want to see how a figure is reached.

Can I add rows or change the layout? You can add your own columns to the right and your own notes. If you insert rows inside a table, copy the grey formula cells down so the new rows calculate too.

Will it work on my phone or in Google Sheets? Yes for viewing and typing, but dropdown lists and the charts look best in desktop Excel or LibreOffice.

Keeping it safe and up to date

A plan is only as good as the numbers you put in. Start with honest estimates, update the workbook as real figures arrive, and compare the two so your next estimate is better. Save a dated copy each month so you can see how your thinking changed.

Read how to build a cash flow forecast for the wider picture. Free calculators that go with it: Corporation tax calculator. See more business templates or ask us for a custom one.

The workbook works in Microsoft Excel, LibreOffice and Google Sheets. It is a tool to help you work out and record figures, not tax, legal or accounting advice, and it is not affiliated with the Kenya Revenue Authority. If something does not work as described, contact us and we will put it right.

Related guides, calculators and templates

• Free calculator: Corporation Tax Calculator
• Guide: How to choose accounting software for a small business
• Guide: How to run a month-end close for a small business
• Guide: How to read a balance sheet: a guide for small business owners in Kenya
• Another template: Annual operating budget by department
• Another template: Full business plan template with financial tables
• Another template: New branch feasibility model

Need something different? Request a custom template, browse all guides or see every Excel template.