Borrowings, if your company has them, are to be disclosed in groups by their nature – bank loans, finance leases etc. The obvious reason is to give the readers an overview of the types of borrowings the company has. One single line saying “borrowings” doesn’t really say it all, does it? 

It’s also important to disclose information about due dates, interest rates and any possible collateral you may have with the loans. The aim is to notify the users of when the amounts are to be paid, what’s paid extra in the form of interest and which assets are to be given away should the company not fulfill its obligations according to agreements.

One thing to note here is that it’s important to separately show the current and non-current portion of borrowings. It enables readers to see which amounts are due within next 12 months and also which type of borrowings they are.

In case you’ve taken a loan that’s tied to covenants (requirements your financial statements have to meet either with a specific financial ratio or simply i.e. equity level from total assets) it’s also to be disclosed as a part of this note. It doesn’t have to be anything too detailed, but merely a statement that there’s a covenant (you may specify that it’s for an example related to “company’s equity levels”) and that the company either meets the requirement or not. Note that in case the financial statements do not meet the ratio, it’s vital you contact the bank or borrower as soon as possible to negotiate on what’s going to happen. If you reach an agreement it’s important to also disclose this decision in the report (to follow the statement that the company does not meet the covenant terms).