Will you lend to me if my business made a loss last year?

Is a loss year a deal-breaker?

No. And in a lot of cases, it’s not even the problem people assume.

When a bank sees a loss on a tax return, their serviceability calculator often says “no income, no loan”. But a loss on paper and a business that can’t pay its bills are two very different things. Plenty of healthy businesses show a loss in a given year because of how the figures were put together.

What a sensible lender does is ask why, then look at what the business is doing now.

What causes a “good” loss?

Cause	What’s going on	Does it hurt repayment ability?
Big depreciation claim	You bought equipment and wrote it off	Usually not — it’s a non-cash expense
One-off costs	Relocation, legal matter, fit-out, a flood	Not if it won’t repeat
Owner wages through the business	Your pay counted as an expense	Depends on how it’s structured
Timing	A big expense landed just before 30 June	Usually not
Tax planning	Prepaying expenses, super contributions	Usually not
Genuine trading loss	Costs higher than income	Yes — this needs a real plan

Since 1 July 2026, the $20,000 instant asset write-off for small businesses with aggregated turnover under $10 million has been made permanent. Businesses that buy several eligible assets in a year can see a big drop in taxable profit — while the equipment helps them earn more.

How do lenders “add back”?

They take your reported profit (or loss) and add back items that don’t reflect ongoing earning capacity — typically depreciation, genuine one-off expenses and interest on debts being refinanced. What’s left is a better guide to what the business can afford.

Your accountant can prepare a short list of add-backs with the reasons. It turns “the business lost $30,000” into “the business made $95,000 before a one-off $60,000 relocation and $65,000 of depreciation” — a completely different conversation.

Figures look worse than your business really is? Tell us the story in 60 seconds — no credit check to enquire.

Which lending options work after a loss?

Unsecured, cash-flow and line-of-credit options (typically $5,000 to $500,000) sized on turnover and bank statements. Because they look at money actually moving through your account, a paper loss can matter less here — provided your deposits are healthy and steady.

Property-secured business loans ($20,000 to $5,000,000) through first mortgages, second mortgages or caveats over residential or commercial property. These lean on equity and your repayment plan, making them the most flexible option after a loss year. If there’s equity but the paper income is thin, see our page on equity with low income.

What will a lender want to see?

• The tax return or financials showing the loss.
• An accountant’s note on the main reasons and any add-backs.
• Recent bank statements and BAS showing current trading.
• Year-to-date management accounts if the new year looks better.
• What the loan is for, and how it helps.

An illustrative example

This example is illustrative only.

A commercial cleaning company invests in ride-on scrubbers, floor machines and two vans, claims large depreciation deductions on them, and moves to a larger depot mid-year. The tax return shows a $42,000 loss. The bank declines a $120,000 loan to fund a new hospital contract.

• The accountant lists $140,000 of depreciation and $38,000 of one-off relocation costs.
• Bank statements show steady monthly deposits and the new contract is signed.
• An unsecured facility sized on turnover covers part; the rest comes from a second mortgage over the owner’s home.

When is a loss a real warning?

If the business loses money month after month because prices don’t cover costs, a loan won’t fix it — it’ll just add a repayment. Before borrowing, compare your margins with your industry using the ATO’s small business benchmarks, and talk to your accountant. If revenue has fallen recently, our revenue dropped page is worth a read. We’d rather help you see that clearly than lend into a hole.

How do I explain a loss year in one paragraph?

Lenders appreciate a short, specific explanation, ideally backed by your accountant. Here’s the kind of paragraph that works:

“The 2025 return shows a $42,000 loss. That includes $140,000 of depreciation on equipment bought to service a new contract, and $38,000 of one-off costs to relocate to a larger depot. Before those items, the business earned about $136,000. Year-to-date trading is up on last year, and the new contract started in July.”

Notice what it does:

• states the loss plainly — no hiding it;
• names the big items that caused it, with amounts;
• shows the underlying result once those are added back;
• points to current trading as evidence.

Our guide on explaining your situation to a lender has a full one-page format. If the loss happened because sales fell rather than because of one-off costs, the conversation is different — see revenue dropped. And if you have strong property equity, equity with low income explains how that can carry the application.

Let a real person look past the headline number

One loss year shouldn’t define how lenders see your business. The reasons behind it — and what’s happening now — tell the real story.

There’s no credit check when you enquire, and your details won’t be sprayed across a stack of lenders. A real person reads your situation and calls you. Please be accurate on the form about your recent turnover and what caused the loss, so we can put your file in front of the right lender the first time. See what’s possible.