how do I substantiate why I need financing

Support financing needs with figures, not with a narrative

The bank usually does not ask for a narrative forecast in the questionnaire, but for numerical substantiation: what is the money needed for, when, and how will it be repaid. That client due diligence is mandatory for the bank under the Money Laundering and Terrorist Financing Prevention Act — the bank must know the origin and destination of cash flows, including in a financing request. In practice, this usually means three components: an investment overview (what is being purchased or financed), a liquidity forecast (how the cash position develops) and repayment capacity (from which turnover or margin does the repayment come). A loose A4 sheet with an explanation is rarely accepted as evidence; the bank wants to see an underlying numerical model, usually with a horizon of twelve to thirty-four months.

What is often overlooked: the bank combines the financing request with a number of the same control questions as in the regular KYB questionnaire. Questions about who are the ultimate beneficial owners of the company and about the source of the company's assets do not formally belong to the financing substantiation, but often appear in the same questionnaire. If the answer to that is already in the chain file, it does not need to be looked up again — it is then a matter of confirmation, not of resubmission.

Where this differs from a regular KYB check

The difference with a normal customer acceptance lies in the level of detail of the substantiation. With regular due diligence, often a reference to filed annual accounts or to a current credit assessment. In a financing request, the forward-looking numerical material is what matters most: the bank looks at what happens aftér the loan, not only at what is already deposited with the Chamber of Commerce according to the Trade Register Act 2007. This explains why a bank questionnaire on financing is often structured differently from a questionnaire from an insurer or a sustainability customer about the same company.