What a bank looks at before granting you credit

Before asking for a credit line or a loan it is worth reading your accounts the way the decision-maker will. The tool takes the figures from your latest accounts and compares them with two sets of ratios: the early-warning ratios of the Italian National Council of Accountants, with different thresholds for each of ten sectors, and the bank-reading ratios that accountants report as practice. It also reads your relationship with banks: credit line usage, overdrafts and the Credit Register.

The sector early-warning ratios

There are five: financial charges to revenue, net equity to total debts, current assets to current liabilities, cash flow to total assets, and social security and tax debts to total assets. The Italian Insolvency Code (Legislative Decree 14/2019) refers to these ratios to assess the sustainability of debt: if all five are beyond the sector threshold, the business is in a situation that needs attention. Here you use them one by one, to see where you are outside the range.

The ratios banks read

Debt service cover (DSCR) measures how many times operating cash flow, net of tax, covers the year’s principal repayments and financial charges. Net financial debt to EBITDA shows how many years of margin it would take to repay the debt. A sharp fall in revenue and a marked reduction in net equity also matter. These thresholds are practice, not law: each bank has its own.

The relationship with banks

There is no legal threshold for credit line usage, but banks read it together with the trend of the accounts. A continuous overdraft beyond 60 days, for at least 5% of the credit lines, is instead one of the signals considered by the Insolvency Code. The Bank of Italy Credit Register collects banks’ reports: a bad-debt or unlikely-to-pay position weighs more than any ratio.

It is not a rating

The result is not a score and does not simulate any bank’s rating. Each institution uses its own models, which also weigh guarantees, sector and behaviour over time. The tool shows where you are solid and where it is worth acting, or preparing an explanation, before you meet the bank.

Where the data comes from

The sector thresholds are those of the Italian National Council of Accountants (document “Crisi d’impresa. Gli indici dell’allerta”). The banking-practice thresholds come from the document on SME bankability by the National Accountants Foundation and the Council. The legal thresholds for the account trend are in Legislative Decree 14/2019. Everything is in the firm’s data archive, with source and verification date.

Frequently asked questions

Does this tool give me my bank rating?

No. It compares your data with public and practice thresholds, but banks’ models are confidential and use other information.

What happens if a ratio is outside its threshold?

It does not mean credit will be refused: the bank will ask for an explanation. Preparing it in advance, with figures and a plan, is what changes the most.

What is the Credit Register?

It is the Bank of Italy database of exposures to the banking system and anomaly reports. You can request your own position directly from the Bank of Italy.

Do I need every figure?

No. The sector and the main figures from the accounts are enough: each extra figure completes the picture, and ratios you cannot calculate are shown as missing.