Responsible Lending refers to a lender’s obligation to ensure a loan is suitable and won’t place the borrower under financial strain. It affects how lenders assess Bank Statements, Repayment History, Credit Assessment, and Borrowing Capacity. It applies to Business Loans, Working Capital Loans, Business Lines of Credit, Invoice Finance, and Low Doc Lending. Relevant blogs include 5 Red Flags a Business Loan Is Bad and 9 Cashflow Mistakes SMEs Make.

Why Responsible Lending Matters

Responsible lending protects businesses from taking on debt they cannot repay. It also ensures lenders only approve loans that match the applicant’s cash flow and financial position. This is especially important for SMEs in the Tradie Hub, Truckie Hub, Café Hub, and Whitecoat Hub.

How Responsible Lending Works

• Reviews business income and cash flow
• Checks repayment history and arrears behaviour
• Assesses liabilities and existing credit exposure
• Evaluates loan suitability for the business purpose
• Verifies information through bank statements and credit reports

Official info: asic.gov.au