Quick answer
An assessor is answering seven questions: who is borrowing, how long and how well the business trades, what the bank statements show, whether tax is in order, what commitments already exist, what the credit file says, and what the money is for and how it comes back. Security, where offered, adds an eighth. Your pack should answer each one without being asked.
Key points
- Think of the file as seven questions, not a pile of documents.
- Each question has one or two documents that answer it best.
- Gaps in answers cause delays; weak answers cause explanations.
- Security, when offered, adds an eighth question about cover.
- Core questions
- Seven, plus security if offered
- Best preparation
- Answer each question before it is asked
- Read next
- The first ten minutes with your file
What is the assessor actually trying to decide?
Whether the money will come back, and whether the file proves it. Everything on the desk is a piece of evidence for that single decision. It helps to stop thinking of an application as a form to complete and start thinking of it as a short argument that the assessor can check.
The argument has seven steps. Each step is a question, each question has documents that answer it, and the application succeeds when the answers agree with each other.
What are the seven questions?
| # | The question | Best evidence |
|---|---|---|
| 1 | Who is borrowing, and is it real? | ID, ABN details, ASIC extract, trust deed |
| 2 | How long and how steadily has it traded? | ABN registration date, tax returns, statements |
| 3 | What does cash really do each month? | Business bank statements |
| 4 | Is tax in order? | Lodged BAS, returns, ATO account position |
| 5 | What is already committed? | Debt schedule, credit file, statements |
| 6 | What does the credit file say? | Credit report for the owners (and entity, where relevant) |
| 7 | What is the money for, and how does it come back? | Purpose statement, cover note, forecast |
If property is offered as security, an eighth question joins the list: what stands behind the loan if things go wrong? That is covered in security cover in plain English.
Question 1 to 3: is it real, and how does it trade?
The first three questions are about substance. Identity and entity checks confirm that the people and the business exist and match. Trading history shows how long the business has operated and whether it has been steady. Bank statements show what actually happened in the last few months.
These are the questions where a mismatch hurts most. A business name on the ABN record that differs from the one on the statements, a trading start date that does not match the tax return, a statement set with a gap: each is easy to fix before lodging, and slow to fix afterwards. The detail of what is marked on statements is in bank statements, as assessors mark them.
Question 4 and 5: tax and commitments
The ATO position tells the assessor whether the business has been paying what it owes. A balance that is nil is straightforward. A balance that is owing, but covered by a payment plan, is a different conversation, and one that deserves its own page: ATO payment plans from a lender’s point of view.
Commitments are the repayments already coming out each month. The assessor builds this from your debt schedule and then checks it against the statements. If a repayment appears on the statements that is not on your schedule, expect a question. The simplest way to avoid it is to list everything, including equipment finance, vehicle loans, buy-now-pay-later and credit card minimums.
Illustrative example. A bakery owner lists two loans on the debt schedule. The statements show three regular debits to finance companies. The third is a small equipment lease the owner forgot. The assessor does not mind the lease, but does mind the omission, and adds a note to the file. The fix would have taken thirty seconds.
Question 6: what does the credit file say?
The credit file shows defaults, arrears, enquiries and the way existing credit has been handled. It rarely decides a file alone, but it colours how every other answer is read. The page on the credit file from the assessor’s chair sets out what appears and how to get your own copy free; the OAIC notes that a credit reporting body must give you a free copy once every 3 months.
Question 7: what is the money for, and how does it come back?
This is the question owners most often leave unanswered. “Working capital” tells an assessor nothing. “Stock for the December peak, repaid from the weekly takings it generates” tells them everything. Put the purpose and the repayment logic in two lines at the top of your pack, using the one-page summary as the format.
How do I check my own file against the seven?
Take a blank page, write the seven questions down the side, and write the document that answers each one beside it. If any line is blank or the answer is weaker than you would like, that is what to fix before you lodge. The application readiness check does the same exercise with twelve quick questions and tells you what to fix first.
What do lenders not look for?
It helps to clear a few things off the table. Assessors are not looking for a perfect business, because none exists. They are not looking for a spotless history, because small-business history is rarely spotless. And they are not marking you on writing style, on how smart your paperwork looks or on whether you used the right jargon. They want to understand a business and judge whether a particular piece of finance suits it.
That reframes the job. You do not have to look impressive; you have to be legible. A modest business with a clear file is a much easier decision than a bigger one with a confusing file, and the clearer file nearly always moves faster.
Ready to lodge?
Once the seven answers are in reasonable shape, lodge a free enquiry. It takes about a minute, asks for no documents and leaves your credit file alone at this stage. One real person reads it; your details are not scattered across a field of lenders.
The more precisely you fill the form in, the better the first call goes. State the real amount, the real purpose, your structure and your state, and mention any property. The seven answers you have just prepared will be ready when the specialist asks for them.
Frequently asked questions
Do all lenders look at the same things?
The broad questions are very similar, but weighting differs. A lender sizing on cash flow leans on statements; a lender with property security leans on the security as well. Your specialist can tell you which questions matter most for your situation.
What matters most?
There is no single winner. In practice a file succeeds when all the answers point the same way, and stalls when one answer contradicts another.
Do lenders only look at the last few months?
Recent trading carries the most weight because it describes the business today, but tax records and the credit file give the longer history that makes the recent months credible.
Can a weak answer in one area be balanced by another?
Often, yes. A short trading history may be balanced by strong recent cash flow, or a messy month by solid security. The key is to name the weak spot and put the balancing evidence beside it.
What do lenders say about the business plan?
business.gov.au says lenders usually want to see a business plan before they approve a loan, and lists ID, financial reports, forecasts, leases and personal financial information among the things they may ask for.