If you are self-employed in Poland and are considering a mortgage loan make sure to read this post. From it you will learn about what the banks will require from self-employed mortgage applicants.
Self-employment, sole trading in Poland
To avoid any doubt I would like to explain in detail which self-employed people this post relates to. This blog entry is about all entrepreneurs who keep the so-called simplified accounting in the form of a Revenue and Expense Ledger (KPiR – Księga Przychodów i Rozchodów) and who are registered in the CEiDG (Central Register and Information on Economic Activity) database. The above applies to a majority of small companies in Poland and probably also to you.
It will also apply to civil law partnerships (in Polish: spółka cywilna, registered with CEiDG) and general partnerships (in Polish: spółka jawna, a commercial law company registered with the National Court Register – KRS) as long as they maintain their accounts in the form of a Revenue and Expense Ledger (KPiR).
How long you should run a business in Poland to qualify for a mortgage?
It will be enough to run a business for 12 months (starting from the date of registration with CEiDG). This is what roughly half of banks require – the rest will want your period in business to be longer (18, 24 or even 30 months).
If your own business is a continuation of a previous contract of employment with the same employer (or with a different employer but within the same industry), you can find a bank for which it will be sufficient if you have been a sole trader for 3 or 6 months.
Be careful with suspending your business
If you have a history of suspending your business activity since the original start date, most banks will count your period in business since the last re-opening (there are exceptions). Your history of suspensions and resumptions of business is recorded and can be seen in CEiDG.
How do banks calculate your business income
To qualify for a specified loan amount you need to have a certain level of income. In the case of income from employment contract the matter is relatively straightforward – we can say that it will simply be your average pay from 3 or 6 months. But how do banks compute income of people running a business?
Put simply, it looks like this:
net income = gross income – costs – ZUS (social insurance) – tax + depreciation
If your business involves providing services for a single client and you have a regular and stable cash inflows, your bank will treat you a little like a person with an employment contract. In such case, getting a mortgage will be much easier. I know it from my own experience with clients from the IT sector who are often self-employed.
Let us assume however that you are a “classic” entrepreneur with high costs at the start accompanied by low or unstable revenues. Apart from working out your average net income, a mortgage analyst will also take into account the following factors:
stability of income and revenue
The volatility of your revenues and income will be analysed. If there are months in which you get relatively high, one-off revenues, the bank may scrutinise the details of such transactions.
months in which you reported a loss
Some banks will turn your application down if you had a loss even in a single month.
your industry sector
There are sectors for which banks do not provide credit at all or which are “not preferred” (e.g. construction and transport)
are you a good payer
They will check all kinds of your obligations – corporate and personal loans, trade payables, social insurance (ZUS) contributions, taxes.
It may happen then that your average net income is sufficient to make you creditworthy for a specific amount, but the bank will refuse you credit due to one of the above-mentioned reasons.
If you run a business in Poland and plan to apply for a mortgage, using the services of an experienced mortgage broker may significantly increase your chances for being approved. After a detailed examination of your financial documents, the broker will choose these banks in which your chances for a positive credit decision will be highest.
What documents the bank will require
You will certainly need to provide more documents than if you had an employment contract. But play it cool, you’ll make it 🙂
PIT-36 or PIT-36L
You will have to provide the most recent PIT (tax return) with all the appendices. It may be an electronic version with confirmation of receipt (UPO) or a hard copy stamped by the tax office if you filed your PIT tax return at the office.
KPiR (Revenue and Expense Ledger)
You will have to present a printout from your electronic accounting system. It will be a summary of individual months of the entire period under analysis. Some banks require a detailed breakdown of all accounting transactions from your KPiR for the most recent month.
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Only a few banks require statements of your business bank account (for 3 or 6 months).
certificate from ZUS of no arrears in contribution payments
Most often this certificate is required only at the time of disbursement of the mortgage (after signing the mortgage contract). You can request it at ZUS office or online via the ePuap platform. For the bank’s purposes, the certificate is valid for 30 days.
certificate from the tax office (US) of no tax arrears
Like with the certificate from ZUS, it will be needed only at the time of mortgage disbursement (after signing the mortgage contract). You can request it directly from the tax office or via ePuap. For the bank’s purposes, the certificate is valid for 30 days.
Although this blog entry is about bank policy in respect of mortgage loans, most information given here will also apply to other types of loans.
Please remember that banks treat people running business activity very individually. If you plan to get a mortgage you should start your preparations from consulting a credit broker – there are many ways in which we can improve your creditworthiness if only we start early enough. Contact me at email@example.com or leave a comment under the post – I will be glad to answer your questions.
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