FOR BUSINESS OWNERS
“If a lender read only your lodged financials, would it see the business you actually run?”
The gap between the two is where my work starts.
Your income may be complex. Your finance strategy should be clear.
Tax returns are only one part of the picture. Depending on the lender and scenario, company financials, trust distributions, retained profit, director income, add-backs and alternative documentation can all affect the way borrowing capacity is assessed. I work with business owners and with borrowers using companies and trusts, and I compare lender policy before I recommend where to apply.
On my booking page, choose “Initial 15 mins phone call”.
Mortgage broker since 2015 · Brisbane-based, working with clients Australia-wide
What I check before I compare lenders
Companies and trusts.
Who actually earns the income, and whether the borrower, the entity or both belong in the application.
Director and shareholder income.
What you draw, what you declare, and how each lender counts it.
Retained profit and add-backs.
What the business keeps, and which non-cash or one-off items a lender may add back to declared profit.
Alt-doc or low-doc, where appropriate.
Whether alternative documentation is a genuine option for your position, and what it changes.
Business and personal liabilities.
Every commitment in both names, including any guarantees you have given.
Commercial and residential crossover.
Where business premises, business debt and a home loan meet, and how a lender treats the two together.
Policy note
Where business income gets complicated
The company keeps most of its profit
- The situation
- You have reinvested in the business, so your personal income looks modest next to the company's results.
- Why lenders treat it differently
- Depending on the lender, retained profit may count in full, in part or not at all, and some lenders assess personal income only.
- What I do about it
- I compare how each lender treats retained profit against your actual financials, and lead with the lenders whose policy fits the business you run.
Income comes through a trust
- The situation
- Distributions to you vary from year to year, and the trust deed and structure matter.
- Why lenders treat it differently
- Lenders differ on how they treat trust distributions and on whether they look at the trust's own financials.
- What I do about it
- I check the deed and financials against each lender's trust policy early, and involve your accountant where the structure itself is the question.
Add-backs make a difference
- The situation
- Your financials include non-cash or one-off items, such as depreciation, that understate what the business actually generates.
- Why lenders treat it differently
- Which items a lender will add back to declared profit, and how much difference that makes, varies by lender.
- What I do about it
- I identify the add-backs that matter in your accounts and check with lenders which they accept before you apply.
Your income has changed recently
- The situation
- A strong recent year, a weaker earlier one, or projections prepared by your accountant.
- Why lenders treat it differently
- Lenders generally look to lodged returns and financial statements, and a projection is at most supporting evidence. How much weight it carries varies.
- What I do about it
- I tell you where you stand before you apply, and work out what evidence each lender would want.
Credit assistance is not tax, legal or financial product advice. Where your question turns on tax treatment, ownership structure or superannuation law, I work alongside your accountant, solicitor or licensed adviser.
Same borrower. Same property. Different lender policy.
How lenders can read the same business income
| Lender A | Lender B | Lender C | |
|---|---|---|---|
| Personal taxable income | Counted | Counted | Counted |
| Company profit retained | Counted in part | Counted in part | Not counted |
| Add-backs | Counted | Counted in part | Not counted |
| Trust distributions | Counted in part | Not counted | Not counted |
| Assessed income | Higher | Middle | Lower |
Lender policy
Lenders don't share one method for turning a business's financials into an income they can assess. Depending on the lender, retained profit, trust distributions and add-backs may count in full, in part or not at all.
What that means for you
The same business can show a different borrowing capacity at each lender, and a lender that looks cheapest on rate may not be the one that counts the most of your income.
A general example
A director's company keeps most of its profit to fund growth. One lender assesses income from the salary the director draws. Another looks at the company's financials and takes retained profit into account. Same borrower, same property, and a different outcome.
Worked example: an illustrative scenario, not a client result.
Christine’s view
“A lender isn't asking whether your business is good. It's asking whether your documents fit its policy. My job is to find the lender whose policy fits the business you actually run.”Christine Junidar
Borrowing estimate
It gives an estimate from the figures you enter; a lender assesses your actual documents against its own policy.
An estimate only, based on the figures you entered and the assumptions listed beside the result. It is not a borrowing limit, a quote, or an offer of credit. A lender will assess your application against its own criteria.
Where to begin
Tell me how the business actually runs.
Bring the structure, the financials you have and what you're trying to do next. I'll tell you which lenders are worth a conversation and what each would need to see.
I read every enquiry myself and will be in touch to arrange a time to talk.
General information only. It does not take your objectives, financial situation or needs into account. Lending is subject to lender assessment and criteria. This is not a quote or an offer of credit.
Credit assistance is not tax, legal or financial product advice. Where your question turns on tax treatment, ownership structure or superannuation law, I work alongside your accountant, solicitor or licensed adviser.