BML Business Financing

BML Business Financing

Maintain Records

To be able to convince the bank of your financial capacity to pay back the loan, it is the most crucial to maintain sales, costs, expenses, and profits. Furthermore, banks also ascertain if the business financed its assets with Debt or Equity before a credit decision to additional lending. We highly encourage businesses to route all the operational income and expenses through our business Current accounts and prepare financial statements such as;

• Statement of Comprehensive income/Profit & Loss Statement
• Statement of Financial Position/ Balance Sheet
• Statement of Equity
• Cashflow Statements

Audited Financials are considered more reliable

Bank require audited financials for applications above MVR 1 million or where the applicant has already been sanctioned a loan, and the outstanding amount of the existing loan and proposed application sums to MVR 1 million and above. Bank only accept financials Audited by a “Institute of Chartered Accountants of the Maldives”-approved auditor (Institute of Chartered Accountants of the Maldives). The bank will consider the audited financials with audit opinions except “disclaimer of opinion”.

Pay Taxes and submit Tax Returns

All applicants shall be compliant as per tax regulations by MIRA. Tax returns will be useful for the bank to confirm the business revenue and profit. Bank will request for tax return statements if the applicant submits Management Accounts instead of Audited Financials.

Maintain a satisfactory credit history

A good and convincing credit history, and honoring all financial obligation on time, is vital for a successful loan application. All banks do a background check of the applicants and their Ultimate Beneficial Owners’, mortgagors, partners, guarantors, directors and shareholders, existing and past repayment history and returned cheques history.

Forecast your cashflows and financing requirement

Projecting your expenses and income for the expansion project will give an estimate of the required funding. Bank will accept realistic forecasts backed by convincing historical amounts. The bank would require a cash flow forecast for the proposed loan tenor which would establish the requirement of finance and that the net cash flow generated from the operations is adequate to repay on time.

Collateral accepted by the bank

Depending on the financing product, the bank would require a security/ies which carries a market value of 150%-200% of the requesting amount. As a primary mortgage Bank accepts land and premise located anywhere in the Maldives. As secondary mortgages movable assets will be accepted to fulfil the shortfall in security cover if any. If the applicant is a limited liability company or partnership, all Directors/Shareholders will be required to provide a personal guarantee for the facilities. Bank may insist on Corporate Guarantee of holding/ subsidiary companies, where needed

What documents do I need to prepare for a Business Loan application? 

The supporting documents required for each product would depend on the requirement and nature of the business. The comprehensive list of required documents is listed on the respective application form.

There are 5 main categories of documents required by the bank

Documents of Identification and Business Incorporation

All documents related to registration and business operation in compliance with laws and regulations ruled by the Ministry of Economic Development, MIRA and other relevant government authorities which may differ with the type of legal entity applying for the financing Facility.

Tax Documents

In addition to the tax registration certificate, as per tax regulations, the bank would require Income Tax return statements, GST return statements, Tax payment vouchers, any agreements with MIRA and tax clearance, a report which is dated within 1 month at the time of application.

Documents indicating Business Activities

A brief profile of the business background, management experience, business activities, location, USP (unique selling point) and business strategy would be useful for the bank to understanding the business.

Documents in relation to the Project

Details of the purpose of the project and utilization of funds. The documents required for the project would differ from the application based on the purpose of the loan. For instance, if the loan is for the development of a real estate property/Guest house, documents such as a construction contract, long-term lease agreement and construction permits, or operating licenses would be required.

Financial Documents

Audited Financial Statements:

Submission of audited financials for the past 2 financial years is mandatory if;

1. For applications amounting to MVR 1 million and above or where the applicant has already been sanctioned a loan, the outstanding amount of the existing loan and proposed application sums to MVR 1 million and above.

2. Requires Auditing for tax compliance as per MIRA regulations

3. If the bank requires it for other reasons

Management accounts:

1. If the business is not required to Audit, the bank will accept management accounts prepared by the company

2. A business is required to audit - but the financial year is not complete, the bank will accept management accounts (for the ongoing year) in line with GST/Income Tax returns.

Financial Projections

Bank would require a financial projection or cash flow statement for the entire loan period with the assumptions on which the cash flow is based. This shall forecast all income and expenditures forecasted as well as the requirement of the financing.

Documents related to Collateral

If the applying product is secured, the bank would require documents to establish the ownership and identification of the mortgagor. If the owner of the property being mortgaged is not the applicant, the bank would require a no-objection letter from the owner/owners.