Affordability in business lending means something different from affordability in a personal mortgage. It is an assessment of whether your company's operating cash flow can comfortably cover the repayments on new debt, alongside any obligations the business already carries.
Debt service cover ratio
The most common metric lenders use is the debt service cover ratio (DSCR): the ratio of your company's net operating income to its total debt repayments in the same period. A ratio above 1.0 means income exceeds repayments; lenders typically want to see a margin of comfort above that threshold. For a short-term loan or a drawdown from Creditcorp Flex, the calculation focuses on monthly rather than annual figures.
What counts as income
Lenders look at the money your company actually collects, not just what it invoices. Recurring, contractual income carries more weight than one-off project fees. If your business has predictable direct debits or subscription revenue coming in, that strengthens your affordability position considerably.
Stress-testing
A responsible lender will consider what happens if revenue dips by ten or twenty percent. Can your business still meet repayments without defaulting? This stress-test is not designed to be punitive — it protects your company from taking on debt that would become unmanageable at the first sign of a slow month.
Affordability is assessed at company level. There is no assessment of director personal income or personal assets.
We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.
See also: How risk is assessed in business lending, How business borrowing costs are priced.