How much can my business borrow?

What decides how much a business can borrow?

Four things do most of the work: serviceability, security, trading history and turnover, and the credit profile. Serviceability sets the base, because a lender is deciding what the cash flow can carry; the other three widen or narrow the amount each lender will consider.

• Serviceability. Can the business meet the new repayment out of its cash flow, alongside what it already pays? The biggest single driver.
• Security. An asset on offer generally lifts the amount, because the lender has something to recover against.
• Trading history and turnover. A longer, steadier record gives a lender more confidence to lend more.
• Credit profile. A clean file widens the field of lenders and the amounts they will consider.

This calculator works the other way around: it starts from a repayment you are comfortable with and shows an indicative amount, which is a planning estimate, not a lending decision. We are a broker, not a lender, so we cannot tell you what any lender will approve. For what lenders look at in practice, from trading history to credit files, see the eligibility questions on our FAQ page, or the full definition of serviceability in the glossary.

Worked example: from a comfortable repayment to an indicative loan

The table below shows what the calculator produces at its default settings for three example repayments. Read it left to right: the repayment is the input, and the loan is what that repayment would clear over the term at the example rate. It is arithmetic, not an assessment: the lender decides what it will lend after looking at your file. Change the repayment, rate or term in the calculator above and watch how far the loan moves.

The example rate is an assumption for the arithmetic, not a rate any lender offers or a prediction of the rate you would be offered, and the repayments are chosen for the arithmetic, not matched to any turnover or business size. Figures are rounded to the nearest dollar. Change the rate, term or repayment in the calculator above and the figures move with them.

Example rate 9.5% a year (the calculator's default, an illustration); term 5 years; repayments monthly; balloon none; no fees, charges or GST included.

Serviceability: what you can service, not what you can request

Serviceability is the heart of the assessment. A lender takes your income, subtracts existing commitments and running costs, and asks whether what is left covers the proposed repayment comfortably, usually with a buffer on top in case rates or trading conditions move. You can ask for any amount you like; a lender offers what it judges your cash flow supports.

That is why the honest answer to "how much can I borrow" is another question: how much can you comfortably repay? Starting there protects the business. Borrowing the maximum a lender will stretch to can leave no room for a quiet quarter, a late-paying customer or a rate rise. The amount that fits your cash flow is almost always a better decision than the largest amount available.

Headroom, not income alone, is what a lender measures: the cash flow left after every existing commitment is met. Two businesses with the same revenue can have very different headroom. If you are weighing a fixed rate, a separate guide answers does a fixed rate change what I can borrow.

How to read this estimate

This calculator works backwards from a repayment. It takes the repayment you say you are comfortable with, the interest rate, the term and the frequency, and works out the loan that repayment would clear over that term. It is the reverse of a repayment calculator. It is useful for a quick sense of scale, but it is not a borrowing-capacity assessment: a lender looks at your income, expenses, other commitments, credit history and the purpose of the funding before deciding what you can borrow. Use this as a starting point, then talk to a broker who can compare real options across a lender panel.

If you already have a loan amount in mind, our business loan repayment calculator works the other way, from that amount to the repayment, total interest and schedule.

How the type of lender and finance changes the amount

The question "how much can my business borrow" has a different answer for each product, because each is sized on something different. A secured loan is sized on serviceability plus the asset behind it. An unsecured loan is sized mainly on trading, so the amounts are generally smaller. Equipment finance and invoice finance are sized partly on the asset or the ledger, which is why matching the product to the purpose often unlocks more usable funding than pushing one product to its limit. A company and a sole trader are assessed on the same principles; the entity changes the paperwork and the guarantee, not the arithmetic. For the full secured and unsecured comparison, see secured vs unsecured business loans.

How to strengthen how much a business can borrow

A few things genuinely move the amount. Clean, consistent trading through the business account is the biggest lever, because it is the evidence a lender leans on. Reducing or consolidating existing repayments frees up serviceability headroom, which is one reason some owners look at business debt consolidation before seeking new funds. Offering security, where you have it, can lift the ceiling. And presenting a complete, well-prepared file to the right lenders avoids the wasted applications that can dent a credit profile.

If the business has traded for less than a year, our guide to startup business loans under 12 months trading is the place to start. For everything else, start on the business loans hub or compare your options with a broker.

Frequently asked questions

Sources

• Maths: the calculator's own functions, see the assumptions under the table

121 Brokers Pty Ltd (ABN 37 674 323 712) is a business finance brokerage based in Byron Bay NSW, a broker, not a lender. The calculator and the figures on this page are estimates from the stated assumptions, not a lending decision; the review date is shown at the top of the page.