Business loan serviceability

How Business Lenders Calculate Serviceability

Serviceability is the lender’s assessment of whether the business can repay the proposed debt while meeting existing commitments and normal operating costs.

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Initial discussion and assessment only. A formal lender enquiry occurs only with your consent.

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The assessment in three practical steps

Step 1

Start with normalised earnings

Remove unusual income and expenses only when there is evidence they will not recur.

Step 2

Calculate total debt service

Include the proposed facility, existing loans, leases, cards and other commitments.

Step 3

Apply a coverage threshold

Lenders generally require cash flow above scheduled repayments to absorb volatility.

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What Business Lenders Calculate Serviceability

Common add-backs include depreciation, interest and genuinely one-off costs. Add-backs are not automatic. Owner wages, related-party rent and recurring “one-off” expenses may be adjusted to market levels.

Cash flow forecasting matters when historical accounts do not yet show a new contract, acquisition or expansion.

  • Reconcile EBITDA to actual bank cash flow
  • Document every proposed add-back
  • Include tax, maintenance capital expenditure and drawings
  • Stress-test lower revenue or higher interest costs
How it works

A clear path from enquiry to lender decision

We organise the information, test lender fit and keep the process moving.

1

Explain the funding need

Tell us what the money is for, the amount required, timing, turnover and any existing facilities.

2

Test lender fit

We check cash flow, bank conduct, security and documents before choosing a sensible lender option.

3

Package the application

We present the purpose, numbers and risks clearly so the lender can assess the deal without avoidable gaps.

4

Compare and decide

We explain the structure, total cost, conditions and trade-offs before you decide whether to proceed.

Frequently asked questions

Questions business owners ask before applying

No. Credit policy, calculations and evidence requirements differ by lender and product. The principles are similar, but the thresholds and weight given to each factor vary.

No. A broker can assess fit, improve the application and manage the process, but the lender makes the credit decision.

Yes. Provide a concise factual explanation, evidence of resolution and the steps taken to prevent recurrence.

Before selecting and lodging with a lender. Early preparation reduces duplicate work and reveals issues that may change the funding strategy.

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Find the finance structure that fits the job

Tell us what you are funding, the amount required and the timing. We will explain the realistic options before you choose whether to proceed.

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