How lenders assess business loan serviceability
Serviceability is not one calculation. It is a set of adjustments to a number the lender does not trust, and most of the value a broker adds sits in arguing those adjustments before the file is submitted.
Every business lender is answering the same question — can this business carry this repayment on top of what it already carries — and they answer it from three sources: the lodged financials, the trading account, and whatever the borrower discloses about existing commitments. The three rarely agree.
The bank statements usually win. They are current, they cannot be presented favourably, and they show conduct as well as capacity. A file where the accountant's figures and the trading account tell different stories will be assessed on the account.
Adjusted earnings
Reported profit rebuilt into something closer to cash generated: depreciation and amortisation back, interest on facilities being refinanced back, then genuine one-offs argued individually. The lender starts sceptical of every adjustment.
Trading account conduct
Average and minimum balances, the shape of the month, dishonours, unarranged excesses, whether ATO and superannuation payments appear on time. Conduct is a character test dressed as a numbers test.
Existing commitments
Every facility, lease, advance and daily-repayment product already running, disclosed or discovered. Undisclosed commitments do more damage than the commitment itself, because they change how everything else on the file is read.
The buffer
Assessed at a rate above the contract rate, so the facility is tested against conditions that do not exist today. Each lender sets its own, and a deal that fails one lender's buffer can clear another's on identical numbers.
An add-back is a cost the lender is being asked to ignore because it will not recur or is not really a cost. Each needs to be identified, evidenced and argued. Presenting them as a total invites the whole total to be rejected.
- Non-cash items. Depreciation and amortisation, added back almost universally, and rarely argued about.
- Interest on debt being retired. Where the new facility clears an existing one, the old interest cost is not going to be there. Straightforward, and often forgotten in the submission.
- Owner remuneration above market. A director paying themselves well above what a manager would cost is distributing profit through wages. What is defensible is the excess over a market salary, not the whole figure.
- Genuine one-offs. A legal settlement, a relocation, a write-off of a single bad debtor, a failed expansion. Each one needs a document behind it and a reason it cannot repeat.
- Related-party rent above market. Where the premises are owned by the directors or a related trust, the excess over market rent is an internal transfer.
- Post-balance-date change. Not an add-back in the strict sense, but the same argument: a signed contract, a new site or a lost customer after balance date makes the historical figure a poor guide, and the case for it has to be built rather than asserted.
What supports each of these is covered in the document checklist.
The test moves with the product. A term facility is assessed on capacity to carry a fixed repayment. A revolving facility is assessed on the swing in the trading account, because the question is whether the limit gets repaid within the cycle rather than whether it can be amortised. Invoice finance shifts the test again — the debtor book and the quality of the customers start to matter more than the borrower's own earnings.
It also moves with the lender. Majors read the lodged financials as the primary source. Second-tier and non-bank lenders weight current trading more heavily, which is why a business with a weak last return and a strong current year lands better outside the majors. Specialist and private lenders may test the exit rather than the earnings entirely. The map is in who lends to Australian businesses.
Where the numbers do not work at all, the honest answer is that the deal is not a serviceability problem to be argued but a structure problem to be re-cut, or a smaller facility. Presenting an unarguable file costs a credit enquiry and some credibility with the assessor.
Lenders are writing: business credit grew 10.8% year on year to the end of July (RBA Financial Aggregates, July 2026). They are also assessing into a market where business insolvencies sit at a ten-year high, with business exits up 37% in the second quarter year on year (ASIC insolvency statistics via ABC News, July 2026). Both conditions push weight onto current conduct rather than historical profit, which favours brokers who submit with the trading account explained rather than attached.
We do not assess serviceability and we do not pre-qualify a borrower's capacity to repay — that is the lender's decision and the broker's submission. What we supply is the enquiry: amount, purpose, timeframe and the borrower's own notes, with the mobile confirmed by SMS code before it ships.
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