Preparing for your bank's annual review

What is the bank actually doing at review?

For most established SMEs, the annual review is the one moment each year when the bank formally looks again at the whole relationship. The relationship manager collects information, the bank updates its internal risk grade for the business, covenants are tested, and a recommendation goes to credit: renew as is, change pricing or limits, add conditions, or reduce the exposure.

The review isn’t only about last year’s profit. Credit teams look at the direction of travel, the quality of the balance sheet, how the accounts have been run, and whether the business’s story still makes sense. A profitable year with a deteriorating balance sheet can produce a tougher outcome than a modest year with a clean one.

What does credit look at?

Area	What they test	What helps
Earnings	Trend, margin, one-offs, quality of earnings	Commentary explaining variances
Balance sheet	Gearing, working capital, related-party loans	Tidy intercompany and director loans
Covenants	ICR, DSCR, gearing, LVR, reporting	Early calculation using the bank’s definitions
Account conduct	Limit excesses, dishonours, swings	A facility that cycles, not one pinned at the limit
Tax and statutory	BAS, PAYG, super current	ATO portal statement showing a clean account
Security	Valuations, LVR	Recent valuation if values have risen
Outlook	Forecast, pipeline, risks	12-month forecast with assumptions

How to prepare a review pack

Send it before the bank asks. A concise pack — often ten pages or fewer — does more than a box of documents.

1. One-page summary. Headline results, what drove them, and what the business needs from the bank this year.
2. Financial statements for the year and management accounts to date.
3. Debt schedule across all lenders.
4. Covenant calculations using the bank’s own definitions.
5. Aged debtors and creditors, with commentary on anything unusual.
6. Forecast for 12 months, with key assumptions stated.
7. Explanations for anything the bank will notice: a loss-making division, a large related-party transaction, a customer loss, an ATO arrangement.

Our guide to writing a funding proposal covers structure and tone, and the guide to your 30 June balance sheet explains what lenders read into year-end.

Timing: why year-end matters

The review runs off your year-end accounts. If they’re late, the review is either delayed (sometimes with facilities rolled on short extensions) or completed on incomplete information — neither ideal. Reporting covenants often require accounts within a set number of days of year-end; missing that is itself a breach.

Year-end also collides with other obligations. Businesses with GST turnover of $20 million or more lodge BAS monthly; others lodge quarterly, with the June quarter due on 28 July. A clean ATO account at review is worth planning for.

What if you expect a difficult outcome?

Some reviews go badly for reasons outside the finance team’s control — a sector the bank has decided to reduce, a restructure of the bank’s own portfolio, or simply a weaker year. If you expect a cut, conditions or a request for security, prepare in parallel:

• model what the business needs if limits are reduced
• identify what security you’re willing (and unwilling) to offer
• understand what a refinance would involve and how long it would take

Knowing your alternative strengthens the conversation. Get a confidential view of your refinance options before the review outcome arrives — no credit check involved.

After the outcome letter

• Renewed as is. Diarise next year’s review and the covenant test dates.
• Limits reduced. See what to do when an overdraft limit is cut.
• More security requested. See when the bank wants more security.
• Covenant issues. See covenant breach options.
• Not renewed. See when the bank won’t renew your facility.

Illustrative review preparation

Illustrative only; no real business. A $28 million turnover freight business had a weaker year after losing a contract, though the replacement contract started in the final quarter. The CFO sent the bank a nine-page pack within six weeks of year-end: results, a bridge from last year’s EBITDA to this year’s, the new contract’s first-quarter performance, covenant calculations with headroom, and a forecast. The bank renewed with slightly tighter reporting, rather than the limit reduction the relationship manager had signalled informally.

Using the review to ask for what you need

The annual review isn’t only defensive. It’s the natural moment to ask for changes, because the bank is already re-underwriting the relationship. Consider asking for:

• a limit increase sized on your measured working capital cycle
• a covenant reset if the business has permanently changed shape
• release of security where loan-to-value has improved
• removal of guarantees from directors who have stepped back
• consolidation of small facilities into a simpler structure

Support each request with numbers and a one-line rationale in your pack. Even if the bank declines, the request frames the conversation around your needs rather than the bank’s concerns.

A review calendar worth keeping

Map the year backwards from the review date: year-end, the accountant’s deadline, the reporting covenant deadline, the pack submission date and the expected outcome. Add covenant test dates and facility maturities. A single page with those dates, shared with your accountant, stops the review from arriving as a surprise.

Before your next review

Whether you’re expecting a routine renewal or a hard conversation, it helps to know where you stand. Tell us the facilities, the review date and the latest numbers.

Enquiring doesn’t touch your credit file, and your review pack stays with the specialist handling your file — it isn’t shopped around. Please be accurate about limits, balances and security, so we can tell you quickly whether there’s a better structure available. Talk to a specialist ahead of your review.