Business Borrowing Power Calculator: How Much Can My Business Borrow?

How do lenders work out how much a business can borrow?

Lenders work out a business's borrowing power in one of three lanes: what the profit can service after existing repayments, a share of annual turnover for unsecured lending, or the equity in property offered as security. The calculator runs all three side by side, because the lane the loan sits in sets its ceiling.

Secured lane: monthly capacity = (net profit before tax + interest and depreciation added back − existing repayments × 12) ÷ 12 ÷ 1.25; amount = capacity × (1 − (1 + r)⁻ⁿ) ÷ r, where r is the annual rate ÷ 12 and n is 60 months.

Unsecured lane: 10 to 15 per cent of annual turnover, capped at $500,000.

Property lane: loan-to-value ratio (LVR) × property value − debt already secured on it, at 70 per cent for commercial and 80 per cent for residential property.

The 1.25 is a debt service cover floor, the ratio our glossary explains under DSCR: every dollar of repayment needs $1.25 of servicing cash behind it, and that floor is the only buffer the tool applies. Turning the monthly capacity into an amount uses the standard amortisation formula set out in the Reserve Bank of Australia's Research Discussion Paper 2021-10, Appendix A.

The calculator assumes:

• The new loan is repaid monthly, in arrears, over 60 months, with no balloon.
• Add-backs are interest and depreciation only: the interest is already inside the existing repayments the tool subtracts, and depreciation is not a cash cost.
• Existing repayments are everything the business pays each month on loans, leases, cards and any ATO payment plan, counted over twelve months.
• The unsecured lane is a share of turnover only; it does not test whether the profit can meet that repayment.
• The property lane uses the value you enter and all debt secured on that property; valuation, fees and stamp duty are not included.
• The three lanes are separate estimates and are not added together, because a loan in one lane uses servicing capacity the others rely on.

When one lane fits what the business needs, the business loans page sets out how we place secured and unsecured facilities.

Which rate and term does the tool use to turn capacity into an amount?

The secured lane uses the 8.50 per cent example rate over 60 months, a planning figure as at 27 September 2026 and not an offer; change it to the rate you have been quoted and the amount moves with it. Business loan rates move with the security, the term, the strength of the file and the type of lender, which the guide to what Australian small businesses pay for finance sets out with dated figures. The line under the result shows what the top of the unsecured range would cost a month at the 15.50 per cent unsecured example rate over 36 months; to model either repayment in full, use the business loan repayment calculator.

Can I get a $500,000 business loan?

It depends on what sits behind it: at the tool's settings, $500,000 in the secured lane needs about $154,000 a year of profit plus add-backs after existing repayments, the unsecured lane reaches $500,000 only at its cap, on turnover of about $3.34 million to $5 million, and the property lane needs $500,000 of equity inside the LVR. The table shows the same test for four loan sizes.

Sources: repayment formula from RBA Research Discussion Paper 2021-10, Appendix A (rba.gov.au, November 2021, read 27 September 2026). The 1.25 cover floor, the 10 to 15 per cent turnover share with its $500,000 cap, the 70 and 80 per cent LVRs and the 8.50 per cent example rate are indicative practitioner figures as at 27 September 2026, not a quote or a limit. Repayments are monthly in arrears over 60 months, rounded to the dollar; the amounts needed are rounded up to the nearest $1,000, the turnover range runs from the 15 per cent share to the 10 per cent share, and the property columns assume nothing else is owing on the property. Each lender sets its own settings.

Lenders also weigh credit history, trading time, the purpose of the loan and how steady the income is, so the table shows what the numbers can carry, not an offer. The share of turnover an unsecured lender uses varies by lender, as our note on sizing a line of credit against turnover explains, and a loan secured by commercial property can be modelled in full on the commercial property loan calculator.

What reduces your business borrowing power?

Anything that cuts the cash available to service a loan, or the equity in the security, reduces business borrowing power: existing repayments, an ATO payment plan, lower profit and more debt against the property.

• Existing repayments. In the secured lane, each $1,000 a month already committed removes about $39,000 of capacity at the 1.25 floor, the 8.50 per cent example rate and 60 months.
• An ATO payment plan. Lenders treat the instalments as a monthly commitment like any other repayment; how a plan and a loan compare is set out in our comparison of a working capital loan and ATO debt.
• Lower profit. Rising costs such as wages come straight off net profit, which lowers the secured lane; how wage rises flow into a café's borrowing capacity shows the effect on one industry.
• More debt on the property. Every dollar owing on the security comes off the property lane, dollar for dollar.

Does a director guarantee add to what you can borrow?

No, a director guarantee is the lender's protection if the business cannot pay, and it adds nothing to any lane. Security is different: offering property moves part of the borrowing from the unsecured lane into the property lane, where the equity sets the ceiling. What a lender can still take on a loan labelled unsecured is covered in what unsecured actually means on a business loan.

How much can a new business borrow, and what income evidence counts?

A new business leans on the property and asset lanes, because the profit and turnover lanes need a trading record a lender can read, and a short record gives it little to work with.

The profit lane starts from net profit before tax in the latest financials or tax return, then adds back interest and depreciation; which other add-backs a lender accepts varies, and our note on the add-backs banks skip lists the common ones. Without two years of financials, some lenders work from business bank statements, BAS and interim accounts instead, as the guide to what lenders use instead of two years of financials explains. Bank scorecards read those figures differently from non-bank lenders, which is why the big banks decline some self-employed borrowers whose businesses are profitable.

The calculator's time trading setting changes the note under the result, not the figures, because each lender sets its own minimum trading time.