You’ve found the opportunity, and you need financing to take it. Then the bank asks for documents — and that’s where many SMEs stall. Here’s what lenders typically ask for, and five signs your books aren’t ready yet.
What banks typically ask for
Requirements vary by bank and loan size, but a typical SME working-capital application asks for:
- Certificate of incorporation and memorandum & articles of association
- The last 6 months of bank statements (12 months for seasonal businesses)
- Financial statements for recent years — audited for larger loans
- A Tax Clearance Certificate from RRA
- Cash-flow projections
Sign 1: You can’t produce a Profit & Loss statement and Balance Sheet
If your “books” are a spreadsheet of sales and a bag of receipts, you can’t give a lender the financial statements they need to assess you.
Sign 2: Your bank balance doesn’t match your records
Lenders compare your statements with your bank statements. Unreconciled accounts are the fastest way to lose their confidence.
Sign 3: You couldn’t get a Tax Clearance Certificate today
RRA’s Tax Clearance Certificate confirms all your returns are filed and you have no tax arrears. It’s issued online, costs RWF 5,000 and is valid for 3 months — but only if your filings are up to date. (It is different from the Tax Compliance Certificate, “Quitus fiscal”, which shows a longer record of on-time payment.)
Sign 4: Business and personal money are mixed
Paying personal expenses from the business account — or the other way round — makes your real profit impossible to see, for you and for the bank.
Sign 5: You don’t know your monthly cash flow
If you can’t say what comes in and goes out each month, you can’t build the cash-flow projection a lender will ask for — or show how you’ll repay.