Wanting to take out a loan while running a business, it is worth knowing that banks calculate creditworthiness differently for individuals and differently for businesses. For banks, the most preferred income is that of an indefinite employment contract. This does not mean, however, that running a business we have less chance of getting a loan. The process often involves more documents and depends mainly on the stability of our income.

What does it look like in practice and what is the relationship between a mortgage and running a business?

When evaluating our ability, banks take into account a range of information. The most important of these are:

Duration of business – The longer we have been in business, the better we will be evaluated by analysts. The minimum period considered by most banks is from 12 or 24 months.

Industry – Banks analyze whether an industry is categorized as a distressed industry.

Stability of income – Banks to assess the stability of income compare it year-on-year. What does this mean in practice? If a company, for example, in 2021 made a loss and in 2022 has a large income analysts will still assume a lower income (in this case they will take into account the loss from 2021) and this means lower creditworthiness. Some banks check financial stability even two years back, so it is worth bearing this in mind when planning to buy a property.

Debts and other liabilities – banks verify whether we have other financial liabilities, both private and corporate. Also analyzed is the timeliness of repayment of debts, as well as settlements with the Tax Office and ZUS.

Transition from full-time to self-employment – if we change the form of cooperation with the employer by switching from an employment contract to self-employment, some banks will treat it as a new activity, and some will require a certain number of months of self-employment.

Method of taxation – the method of taxation has a huge impact on how banks will calculate our creditworthiness. Its forms include:

  • Revenue and expense ledger (KPIR)

Is the most preferred form of business by banks because on the basis of the ledger analysts can easily check whether the business is stable. Banks usually require a PIT for the previous year and an income and expense ledger for the months of the current year.

  • Lump sum

When examining the borrower’s ability to repay the debt, the bank takes into account the income the business brings in. In the case of flat-rate companies, this is not possible because tax is paid on the company’s revenue and not income.

Therefore, the bank is not able to calculate what the actual income of the company is, so when calculating the creditworthiness it usually assumes a certain percentage of income, such as 25% or 50% of income. Thus, it may turn out that the entrepreneur’s creditworthiness will be severely reduced.

  • Tax card

In the case of a tax card, the assessment of income and creditworthiness is actually the most difficult. Income is calculated on the basis of the declaration of tax paid. This multiplied accordingly by the ratio adopted by the bank (from 5 to 15), which means that the creditworthiness, depending on the bank, can be very different.

Documents needed to apply for a loan:

Depending on the banks, different documents are required, the most common being:

  • PIT for the last year or two
  • Revenue and expense ledger for the previous and current year (KPIR)
  • Revenue records for the previous and current year (lump sum)
  • Tax decision for the previous and current year (tax card)
  • Certificate of no arrears in Tax Office and ZUS