Affordability Assessment

How affordability assessment works

For a business this can involve accounts, bank statements, existing facilities, forecasts and sensitivity to weaker trading. The lender may consider the owner or guarantor separately where relevant.

Practical UK business example

A seasonal supplier proposes a fixed monthly loan payment. The assessment considers whether its quieter months can support that payment rather than relying only on annual turnover.

Illustrative example only; not a finance quotation or a client case study.

Why it matters

It connects the borrowing decision to actual payment capacity and can reveal that a different term, amount or facility would be more suitable.

Limitations and common misconceptions

A valuable asset or a high turnover figure does not by itself establish affordability. The assessment is not a guarantee that future trading will match the forecast.

Discuss business borrowing to discuss how the structure relates to your business.