SME Accounting
Preparing a financing application: The accountant’s role
July 23, 2026
At a Glance. To finance a business project in Quebec, a lender almost always requires financial statements for your last two or three fiscal years, your T2 and CO-17 returns along with your notices of assessment, a projected cash flow budget covering 12 to 24 months, and an equity contribution that typically ranges from 10% to 25% of the project’s cost. The lender then calculates ratios, including the debt service coverage ratio, which is often expected to be around 1.25. An accountant experienced in financing prepares these documents in the format expected by the analyst and often makes the difference between a rejection and an approval.
Whether you’re seeking a startup loan, looking to purchase equipment, acquire a business location, or secure working capital, all lenders evaluate your application the same way: based on verifiable figures and credible projections. In Quebec, this means properly prepared financial statements, up-to-date tax returns filed with the CRA and Revenu Québec, and a financing package that meets the evaluation criteria of financial institutions, the BDC, or Investissement Québec. This guide details the required documents, the calculated ratios, and the accountant’s specific role at each stage.
A lender does not finance an idea; it finances a demonstrated ability to repay. However, this demonstration requires standardized financial statements prepared according to specific rules. Financial statements compiled internally in a spreadsheet carry less weight than a set of financial statements prepared by an external accountant, and even less than a review engagement signed by a CPA who is a member of the Ordre des CPA du Québec.
In a financing application, the accountant plays three roles:
The foundation of your application is your historical financial statements. Most lenders request the last two or three fiscal years, supplemented by recent interim statements, often less than 90 days old, to see where you stand now. Here’s a typical breakdown of a financing application for a Quebec SME.
| Required documents | What Lenders Look For | Who prepares it |
|---|---|---|
| Financial statements for the last 2-3 fiscal years | Profitability, revenue trends, net assets | Accountant (compilation, review, or audit) |
| Interim financial statements less than 90 days old | Current Situation, Seasonality | Accountant or In-House Bookkeeper |
| T2 (CRA) and CO-17 (Revenu Québec) returns and notices of assessment | Tax Compliance, Reported Income | Accounting |
| 12- to 24-Month Cash Flow Forecast | Ability to make monthly payments | Accountant, by your side |
| 2-3-Year Projected Results and Assumptions | Project Feasibility | Accountant, by your side |
| Age of Accounts Receivable and Accounts Payable | Liquidity Quality, Customer Concentration | Accounting software, approved by accountants |
| Shareholders’ Personal Balance Sheet | Personal Guarantee, Source of the Down Payment | You and Your Accountant |
The level of assurance required varies depending on the amount and the risk. For a small loan, a compilation engagement (which has replaced the “Notice to Reader” since 2021, under Canadian Standard NCSC 4200) is often sufficient. Beyond that, many lenders require a review engagement, which provides limited assurance on financial statements, and large financing transactions may require a audit, which provides reasonable assurance. Review engagements and audits are performed by a CPA authorized to conduct such engagements; confirm early on the level required by your lender, as these engagements require planning and are more expensive than a compilation engagement.
Before submitting your application, make sure your GST (5%) and QST (9.975%) remittances and your source deductions are up to date with the CRA and Revenu Québec. An outstanding tax balance is one of the first red flags for analysts; if you have one, your accountant can negotiate a payment plan before you submit your application. Our GST/QST Guide for Businesses outlines these requirements.
Historical financial statements show where you’ve come from; projections show that you’ll be able to repay the loan. Two documents are almost always required:
The value of these projections lies entirely in their assumptions. A lender systematically assesses the realism of the plan: revenue growth consistent with historical trends, supported by signed contracts, seasonality factored in, and expenses that keep pace with actual inflation. Many analysts also apply a sensitivity analysis, for example, reducing revenue by 10 to 20 percent, to verify that the repayment plan remains viable. An accountant well-versed in this process immediately develops a realistic scenario and a conservative scenario, with each assumption documented in a workbook that the analyst can verify: this is what distinguishes a credible projection from an optimistic spreadsheet.
Behind every credit decision lies a set of financial ratios. The exact thresholds vary from one lender to another and are not official rules, but the following general ranges consistently appear in SME applications.
| Ratio | Simplified Process | Common Order of Magnitude |
|---|---|---|
| Debt Service Coverage | EBITDA / (principal + annual interest) | 1.25 and up |
| Working Capital | Current Assets / Current Liabilities | 1, 2, and more |
| Debt | Total Debt / Net Equity | Often 3 to 1 or less |
| Down Payment | Your contribution / project cost | Often 10 to 25% |
Two key factors deserve individual attention before submitting the application. First, the Executive compensation : The split between salary and dividends affects reported profit, net worth, and the calculated repayment capacity; our article salary or dividends explains this trade-off. Next, the down payment : Most lenders want to see the entrepreneur commit 10 to 25 percent of the project’s cost; if the down payment is too low, this can sometimes be corrected through additional capital contributions from shareholders or subordinated financing, arrangements with which your accountant is familiar.
For most SME loans, the lender requires a personal guarantee from the shareholders, backed by a personal financial statement. Your commitment therefore extends beyond the business: discuss the scope of the guarantee and possible safeguards with your accountant before signing.
The accountant’s role often includes referring the business to the right lender. The main avenues for a Quebec SME are:
Every lender has its own forms and requirements, but the core of the application remains the same: accurate financial statements, credible projections, and defensible ratios. Getting this foundation right the first time allows you to approach multiple lenders simultaneously and compare their offers.
In practical terms, here is the typical process for a funding preparation project:
In terms of fees, preparing a financing application is generally included in the business’s overall accounting services agreement. To give you an idea of the scale: the median fee is approximately $3,000 per year, and most engagements range from $500 to $6,000, based on actual fees from 1,248 engagements completed through Bankeo (2024-2026), out of more than 15,000 requests received. The Bankeo Fee Barometer provides a breakdown of these ranges by department and sector; any review engagement or audit required by the lender is added on top of this baseline and is budgeted for from the outset.
Experience is key: an accountant who regularly puts together financing applications is familiar with lenders’ criteria, the documents that are always missing, and the actual turnaround times. This is exactly the type of professional Bankeo targets for its matching service: you describe your project, we introduce you to accountants in our network whose expertise matches your needs, and you’re free to choose.
Bankeo connects you for free with vetted accountants from its network of over 1,500 partners, selected based on your industry and your project. Matching is typically done within 48 hours; the service is free and requires no commitment, and we’ll support you for as long as you need, especially as your needs evolve alongside your business growth.
Find my accountantThe basics: financial statements for the last two or three fiscal years, interim financial statements dated within the last 90 days, T2 and CO-17 returns with notices of assessment, a projected cash flow budget for 12 to 24 months, projected results for 2 to 3 years with underlying assumptions, the aging of accounts receivable and accounts payable, as well as the shareholders’ personal balance sheets. A business plan accompanies all of this for startup or expansion projects.
This is rarely the case for an SME. For a small financing request, a compilation engagement (which has replaced the “notice to reader” since 2021, under NCSC 4200) is often sufficient. Many lenders require a review engagement, which provides moderate assurance, above a certain amount, and a full audit is typically required for large financing amounts. The required level varies from lender to lender: confirm this in writing before ordering the engagement, as the cost increases with each level.
Two documents: a monthly cash flow budget covering 12 to 24 months, which includes debt service for the requested loan, and a projected income statement for 2 to 3 years. What matters most are the assumptions: growth based on your historical data, supported by contracts, and seasonality factored in. Also plan for a conservative scenario, as the analyst will test the viability of repayment if your revenue declines by 10 to 20 percent.
This is the ratio between the cash flow generated by your operations, often approximated by EBITDA, and your annual principal and interest payments. A ratio of 1.25 means you generate $1.25 for every dollar of payment. Many lenders use a threshold around 1.25 as a general guideline, but each institution has its own criteria. Your accountant calculates this ratio before submitting the application and suggests adjustments if the application is accurate.
Preparing the application is generally part of the business’s overall accounting mandate. The median fee is approximately $3,000 per year, and most engagements range from $500 to $6,000, based on the actual fees from 1,248 engagements completed through Bankeo (2024-2026), out of more than 15,000 applications received. A review engagement or audit required by the lender is added to this base fee. The Bankeo Fee Barometer provides a breakdown of the ranges by department and sector.
Describe your project to Bankeo: the matching service is free, with no obligation, and connects you with vetted accountants from a network of over 1,500 partners whose expertise aligns with your needs, in this case, preparing financing applications. Entrepreneurs are often matched within 48 hours; the service has a rating of 4.7 out of 5 based on more than 180 Google reviews, and we’ll support you for as long as you need, even if your accountant is no longer the right fit in six months.
General information provided for informational purposes only, based on known 2026 tax rules. It is not a substitute for the advice of a Chartered Professional Accountant (CPA): always consult a professional regarding your specific situation.
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