A lender review is a tracing exercise, so make the group traceable
An annual review of a corporate group is the lender rebuilding your structure inside their own credit model, and your preparation succeeds when their rebuild matches your books. The account manager and a credit analyst will pull together every facility the institution has extended to every related entity and to you personally, then test the whole exposure at once: covenant compliance, updated statements, current rent rolls or receivables, and whatever changed since last year. They are not reading your statements the way you do. They are following cash, from tenant or customer through each company to the debt payment, and every hop that cannot be traced becomes a question.
That framing tells you what preparation actually is. It is not polishing a pitch; it is removing the guesswork between entities, so the analyst never has to reconcile two companies' versions of the same transaction. A group whose numbers agree with each other gets a faster review, fewer conditions and a warmer hearing when it asks for more money. A group whose numbers argue with each other gets follow-up lists, and follow-up lists have a way of growing.
Reconcile the intercompany ledger before anything else
The intercompany ledger is the first thing to fix, because it is where multi-entity groups are most often wrong. Every management fee, intercompany rent and loan advance appears in two sets of books, and the two entries have to mirror each other exactly: what one company shows as a receivable, the other shows as a payable, to the penny and as at the same date. We walk through the bookkeeping mechanics in how intercompany transactions should be recorded in a real estate group; for a lender review the standard is simple: matched, documented, and explainable in one sentence each.
Fees and rents need commercial substance behind them. Management fees should be invoiced at levels you can justify by the work performed, with HST charged where it applies; note that a fee billed into a residential rental company carries HST the recipient cannot recover, because exempt rents give it no input tax credits, so the tax is a real cost of the arrangement. Intercompany loans need written terms, and their tax behaviour is its own subject, covered in how intercompany loans affect a corporate group. Loans to shareholders carry a further deadline: money drawn from a company and left outstanding past the end of the following fiscal year can land in the shareholder's personal income, and analysts recognize that risk on sight.
Shareholder loans owed by the companies to you deserve one more piece of paper: a postponement agreement in the lender's favour. Signed, it lets the analyst treat your loans as quasi-equity standing behind the bank; unsigned, they are just more debt ranking beside the lender, and the group looks more leveraged than it really is.
The package the analyst expects, and what each piece is for
A complete review package answers questions before they are asked. This is the standard set for a multi-entity group:
| What the analyst asks for | What they are checking |
|---|---|
| Organization chart with ownership percentages | Who owns what, where the guarantees sit, and whether any entity is missing from the last review |
| Year-end statements for every entity | Prepared by a CPA, consistent in policy year over year, and recent enough to still describe the business |
| Combined cash flow with eliminations | What the group truly earns once intercompany rents and fees cancel out |
| Rent rolls and lease summaries | That reported rents trace to real tenants, real terms and staggered expiry dates |
| Mortgage and loan statements | Balances, rates, maturities, and any debt taken on elsewhere since the last review |
| Intercompany loan and fee schedule | That every balance matches its mirror in the other company and rests on documented terms |
| Guarantee and security summary | Which entities stand behind which loans, and what collateral is already pledged |
| Proof tax accounts are current | Corporate tax, HST and payroll remittances, because CRA arrears can rank ahead of the lender |
Assemble it once, properly, and maintain it. The second year's package is a fraction of the first year's work, and a group that hands this over unprompted has already answered the character question every credit file quietly asks.
One consolidated cash flow answers the analyst's real question
The analyst's real question is whether the group, taken as one economic unit, comfortably services everything it owes, and only a consolidated cash flow answers it. Intercompany rents and management fees drop out on consolidation, since money the group pays itself is not income. CCA and other non-cash items get added back, real capital spending and actual taxes get deducted, and your own draws are counted, because the group has to fund your life as well as its mortgages. What remains, measured against total payments to every lender, is the group's coverage, and it decides how the whole file reads.
Property ownership structure determines how much of the group each lender can see, but less than owners hope. Guarantees pull non-borrowing entities into the analysis, shared collateral does the same, and most institutions ask about related companies as a matter of course. The practical assumption to prepare under: every entity, and your personal position, is already on the analyst's page, so a weak company cannot be left out of your version of the story. If it appears in theirs and not in yours, the gap costs more than the weakness.
The red flags that stall reviews
Most stalled reviews trace back to a short list of preventable problems:
- Stale or missing statements. Credit agreements set reporting deadlines, and blowing them is itself a covenant breach before anyone reads a number.
- Intercompany balances that do not match. When company A's receivable is not company B's payable, the analyst stops trusting both sets of books.
- CRA arrears. Unremitted HST or payroll deductions alarm lenders out of proportion to the amounts, because CRA's claim can rank ahead of theirs.
- Undocumented shareholder draws. Cash leaving the group with no loan terms, salary or dividend paper around it reads as leakage.
- An entity in negative equity. It may be explainable, but it needs explaining before the analyst finds it, not after.
- Debt or guarantees the lender learns about second-hand. New borrowing elsewhere in the group, discovered rather than disclosed, damages the file more than the debt itself does.
Sometimes the recurring red flag is the structure itself: six companies doing the work of three, with every extra entity multiplying reconciliations, filings and chances to disagree. Simplifying the group is a real option with real tax consequences, and we weigh it in whether related real estate corporations should be amalgamated.
What changes the preparation, and how we run it
The size of the preparation job depends on a handful of facts, and they are worth an honest self-assessment:
- How many entities there are and whether year-ends align. Mismatched year-ends make consolidation harder and stale numbers likelier.
- Whether one firm prepares all the statements. Groups assembled by three different accountants rarely reconcile on the first pass.
- The state of intercompany documentation. Written agreements and matched balances, or a decade of undocumented transfers to unwind.
- The status of every CRA account. Clean and current, or arrears that need a plan before the review, not during it.
- What is maturing soon. A review that doubles as a renewal negotiation deserves an earlier start and a stronger package.
We prepare groups for review the same way we keep them: every entity's books closed on one rhythm, intercompany balances reconciled monthly, and a consolidated cash flow that is always no more than a few weeks old. For groups we support through an Ongoing Financial Partnership, the review package is a byproduct of normal reporting rather than an annual scramble. Walla Assaf spent years in banking before founding Tauro, so the file is built the way the person reading it was trained to read it, and where the ask is bigger than a routine review, our Business Financing Advisory builds the case for new money. The same consolidated view is also the starting point a business estate planning CPA in Ontario needs before any freeze or succession plan, so the work pays twice. It starts, as everything does, with a free 15-minute discovery call.
