7 factors that impact your borrowing power

"I'm applying for a business loan—how much can I borrow?"

This is one of the first questions business owners ask when seeking funding, but the answer isn’t always straightforward. Lenders assess several factors in order to determine your borrowing power, and the final amount you’re approved for can vary widely depending on your financial situation, industry, and type of business loan you're after.

We’ve broken down the 7 main factors that influence how much you can borrow for a small business loan—and what you can do to maximise your chances of securing the amount you need.

How much can I borrow for a business loan?

Here's what can impact your borrowing amount:

1. Business revenue and cash flow

Your financial situation—particularly your revenue and cash flow—plays a significant role in determining how much you can borrow because it reflects your ability to make your business loan repayments. Higher, consistent revenue and a positive, stable cash flow are signs of a healthy business, which give lenders more confidence to offer you a higher loan amount.

2. Time in business

A longer trading history indicates business stability, a proven business model, and the ability to manage operations through market fluctuations. Lenders will also have more financial data to assess, making it easier for them to evaluate risk and offer a higher loan amount with more favourable terms, especially if you've been operating for two years or more.

3. Credit history

Your credit history is a record of your borrowing and repayment activity over time, including information about your credit cards, payment history, any defaults, credit applications, and more. A strong credit history tells lenders that your business has consistently met its financial obligations, instilling trust in your borrowing ability.

4. Loan type and purpose

Different loan types come with different risk levels and different structures, which will influence the maximum borrowing amount. Secured loans typically get you higher amounts than unsecured alternatives, but we'll explain this further in a bit. With invoice finance, you'll usually get a percentage of the total invoice value (typically 70-90%), and with asset finance, the amount you can borrow is typically tied to the value of the asset.

Your loan purpose also matters. For example, if you need working capital to cover everyday operating costs, you'll likely get a smaller loan, whereas if you're looking to expand, you may be able to access a larger amount, particularly if your projections show a clear ROI.

5. Industry risk profile

Certain industries have a history of regular uncertainty or economic volatility. These are considered high-risk industries and include agriculture (heavily reliant on weather and government regulations), construction (high risk of project delays and material cost fluctuations), hospitality (risk related to seasonality and market competition), and start-ups (limited trading history).

Sectors with more predictable income streams, like healthcare, education, and professional services, may receive larger loan offers and access more favourable loan terms.

6. Existing debt

When assessing whether your business can handle additional repayments, lenders will calculate your debt-to-income (DTI) ratio. A high DTI means a large portion of your income goes towards existing debt—signalling higher risk to lenders. Plus, existing debts limit your available cash flow and even if you're approved for another loan, you're likely looking at lower borrowing limits, higher interest rates, and shorter repayment terms.

7. Collateral

We mentioned before that secured finance generally allows you to borrow higher amounts than unsecured finance. The asset you offer as collateral works as a safety net for lenders—it means that if you were to default on your loan, they have a backup plan to recoup losses. There's a lower risk level, which gives lenders the confidence to offer larger loan amounts (as well as lower interest rates and longer repayment terms).

Tips to improve your borrowing capacity

A few simple strategies can help strengthen your financial position and increase your chances of securing a higher loan amount include:

• Improving your cash flow by speeding up receivables, cutting unnecessary expenses, and building a cash reserve
• Keeping your financial records accurate and up to date
• Strengthening your credit score where possible
• If possible, offering valuable collateral such as property or equipment
• Keeping your personal and business finances separate

Need funding but not sure which loan type is right for you? Our platform compares loans from over 90 lenders to connect you with ones that work with your unique needs, from business lines of credit to secured and unsecured business loans, invoice finance, and more. We manage the paperwork, handle the application, and help get your funding sorted—so you can stay focused on growing your business. Get a quote today.