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Profit

Profit is the money a business keeps after all expenses are deducted from revenue. Lenders rely on profit figures to assess borrowing capacity, financial stability, and ability to service Business Loans, Working Capital Loans, and Equipment Finance. Profit reflects efficiency, cashflow strength, and overall business health. Related terms: Revenue, OPEX, Cash vs Accrual. Relevant hubs: Business Owners Finance Hub.

Why Profit Matters

Profit is one of the strongest indicators of a business’s ability to meet loan repayments. Growing, stable profit improves approval strength and reduces lender risk.

  • Indicates operational efficiency
  • Shows ability to service loans
  • Impacts borrowing capacity and loan amounts
  • Essential for business valuation and financial statements
  • Used to forecast future cashflow strength

To see how profit and cashflow work together in practice, explore: 9 Cashflow Mistakes SMEs Make, Business Cashflow System (WCL + LOC + Invoice), and Working Capital Loans 2025.

How Profit Is Calculated

  • Revenue – Expenses = Profit
  • Expenses include OPEX, payroll, marketing, and overheads
  • Profit is tracked monthly, quarterly, or annually
  • Reported through BAS, tax returns, and financial statements
  • Verified with bank statements and accounting software

Strong profit trends support approvals for Business Lines of Credit and revenue-based facilities like Invoice Finance.

Official reference: business.gov.au

Is profit the same as cashflow?
No — a business can be profitable but still have poor cashflow depending on timing of payments and expenses.
Do lenders require profit to approve loans?
Usually yes — unless applying for low doc or cashflow-based products, profit is a major approval factor.
Can profit be negative?
Yes — negative profit means losses, which reduces borrowing capacity and approval likelihood.
Does profit include tax?
No — profit is usually calculated before tax, then tax is applied to determine net profit after tax.
How do lenders verify profit?
Using tax returns, BAS, accountant-prepared financials, and bank statement analysis.