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You’ve got the loan (great!). That means your credit history and collateral have already been approved. But what happens when your loan comes up for annual review? If your business has evolved since you first landed financing, it’s likely your needs have as well. Here’s how to prepare for your loan review.

If your financing needs are likely to increase, plan to ask for a loan increase at this meeting. “It doesn’t look good on either the borrower or the banker if, three months after the annual review, you go back for more money and it didn’t come up at the time,” says Tim Nadelle, Director, Small Business & High Net Worth Solutions, Manulife Bank. “It looks like you’re not doing any planning.”

“The focal point of your review meeting will change depending on your company’s financial statements,” says Nadelle. “So, if there’s been deterioration, the bank becomes very focused on the risk.” It’s up to you to demonstrate what actions you’re taking to improve the situation.

Start by understanding your own financial statements and zeroing in on the key financial ratios that matter most to your business. Typical ratios from your income statement include gross profit and net profit, as a percentage of sales. Typical balance sheet ratios include current ratio and debt to equity. If you have a commercial mortgage, the debt service coverage ratio will be important to your banker. Bankers often use these ratios to form loan covenants around your business. If you’ve breached a covenant (say, e.g., your debt to equity ratio covenant is 2.5:1 and you’re sitting at 4.0:1), you’re effectively in default of your loan. That doesn’t mean you’re going to lose your loan, but it may put your file under additional scrutiny.

Failing to pay business-related taxes on time can result in stiff fines and penalties, not to mention a bad credit record. Your advisor will help you develop strategies that can reduce or defer the amount of tax you pay, as well as create a yearly budget to ensure a payment never gets missed.

“The financial statement tells a story,” says Nadelle, “and the last thing a business owner should do is tell a story that isn’t consistent with the story told by the financial statement.” Ultimately, the effectiveness of your review will increase the more you understand your financial situation.