Financing

Seit Basel II, the banks are obliged to assess the creditworthiness of their customers through a rating.

Before granting a loan, banks assess the financial situation of the business. They evaluate the company based on various criteria and assign a rating, known as the bank rating. This rating is a metric that indicates the likelihood of the company becoming insolvent within a year and, therefore, not being able to repay the loan. This probability is measured in terms of default probability. The company's ability to obtain a loan largely depends on its default probability. The bank rating also determines the interest rates for the loan. A company with a good rating can expect favorable interest rates, while a company with a lower rating may face significantly higher interest rates or even struggle to secure a loan.

To determine the rating, banks consider both quantitative and qualitative factors. The weightage given to each criterion varies from bank to bank. Quantitative factors, also known as "Hard Facts," include data on the company's assets, earnings, and financial position derived from the annual financial statements. The equity capital serves as a significant risk indicator. Banks calculate various financial ratios during the analysis of the financial statements, which form the basis for the balance sheet rating. These ratios may also vary across different banks.

If there is already a banking relationship with the institution, it will also assess the development of those accounts. The "Soft Facts," which are derived from the qualitative rating, complement the Hard Facts. These are factors that pertain to the company's operational structures and economic environment but cannot be quantified. Some examples include:

• Evaluation of the company's management and leadership
• Assessment of the business environment
• Analysis of the company's development
• Evaluation of the marketing approach

We recommend the following measures to improve the rating:

• Monitor your account development regularly and avoid overdrafts.
• Proper preparation is essential when applying for credit. Convince your bank advisor with well-prepared, clear, and accurate documents. Create a strong business plan and a long-term liquidity plan.
• Attend personal meetings with your bank advisor and actively maintain regular contact. Always be transparent about your financial situation instead of trying to sugarcoat poor financial statements. Building trust with your advisor contributes to a better bank rating.
• The most crucial measure is the timely preparation of a meaningful annual financial statement. We ensure that the financial statement is "Basel II" optimized from the start during its preparation.