The debt model lenders expect to see.
Behind every lender pack sits the model, the workbook from which the IM, the deck and the credit memo all draw their numbers. This page sets the model out part by part, with three pages of specimen outputs to download.
A three-statement model built around the debt.
Lenders expect a three-statement model in Excel, properly linked, monthly for at least the first forecast year and annual to the end of the plan. On top of the statements it carries the debt schedule, the covenant tests, a monthly liquidity walk and a scenario grid, with the drivers built to flex.
The debt model, part by part.
| Part | The question it answers | What a credit officer checks | Common weakness |
|---|---|---|---|
| Three statements | Does the forecast hang together? | That the statements link and the history ties to the audited accounts | Statements that do not balance or tie, or drivers hard-coded so a lender cannot flex them |
| Base-case outputs | Does the base case carry the debt with room? | That leverage, cover and liquidity clear their thresholds in each forecast year | A step-up in growth or margin with no driver behind it |
| Debt schedule | How is the debt repaid? | That interest, amortisation and any sweep are paid from cash the plan generates | Opening debt that disagrees with sources and uses |
| Covenant tests | How much headroom is left? | Actual against threshold at every quarterly test date, on the facility’s definitions | Tests run on the borrower’s own EBITDA definition, or at year-ends only when the facility tests quarterly |
| Liquidity walk | Does cash clear its floor every month? | That cash plus the undrawn revolver clears the floor in the tightest month | Year-end cash only, which hides the trough |
| Scenario grid | How far can earnings fall? | That the break-point sits beyond a plausible downside | A downside that trims revenue but leaves costs, working capital and net debt untouched |
The model is the source of every number in the pack.
Cash, covenants, and a forecast that holds.
The credit officer tests the model for cash and covenants and runs the lender’s own downside through it. A model that breaks when a driver is flexed tells the lender the business does not know its own numbers.
Three pages of model outputs.
The specimen below shows the base-case output table and selected workbook renders from the model behind the pack, on the same fictional borrower as the rest of the pack, Northstar Components, a £10.5m refinancing. No real company, no live mandate, and nothing in it is an offer or advice.