How is my business borrowing limit decided?

2 min read

AffordabilityThe central test

Cash flowSurplus after costs

HistoryConsistency and conduct

Cash flow and affordability come first

The foundation of any limit is affordability: can the business meet the repayments out of its trading without strain? A lender reads recent bank statements to see revenue, outgoings and the surplus left over, then sizes the facility so repayments stay well within that surplus. The debt service coverage ratio is one way this headroom is measured. You can run the same test yourself with the affordability calculator.

History, consistency and credit standing

Beyond raw affordability, a lender weighs how steady the trading is and how the company has conducted itself. A consistent revenue pattern supports a higher limit than the same average achieved through wild swings. Filed accounts, the company's credit standing and any past issues form part of the read. A clean repayment record on previous borrowing is one of the strongest signals of all. See what lenders check on a business loan application.

Purpose and how Credicorp decides

What the money is for helps a lender judge whether the size and term make sense — funding stock ahead of a busy season reads differently from plugging a recurring shortfall. Credicorp decides the limit on the company's own trading and cash flow, lending to the business with no personal guarantee. The figure reflects sustainable capacity today, and it can be revisited as the company grows — see can I increase my credit facility limit.

Frequently asked questions

Can I influence the limit I'm offered?

Yes, indirectly. Keeping the business bank account active and tidy, separating company and personal money, filing on time and trading consistently all strengthen the affordability picture the limit is built on. The cleaner the cash flow, the higher the sustainable limit.

Is the limit fixed for good?

No. It reflects the company's position at the time and is reviewed as trading changes. A growing, well-conducted business can ask for more headroom; if trading weakens, a limit may be adjusted down to keep it sustainable.