Model how a new loan affects your monthly cash flow, tax position, and break-even point.
Model how a business loan impacts your monthly cash flow, including tax deductions and break-even revenue. Free Australian business loan affordability calculator.
01 —INPUTS
Operating costs excluding loan repayments.
Company tax rate (default 25%).
02 —RESULTS
Monthly net cash flow2,972.36
Monthly repayment2,027.64
Annual repayment24,331.67
Revenue-to-repayment ratio10.1%
Annual net cash flow35,668.33
Tax deductible interest1,082.92
Effective annual cost (after tax)23,248.75
Break-even monthly revenue17,027.64
Before taking on a business loan, understanding the cash flow impact is essential. This calculator shows your monthly net cash flow after the repayment, the tax benefit from deductible interest, and the minimum revenue you need to break even. It also calculates your revenue-to-repayment ratio — a key metric lenders use to assess serviceability.
How do I assess whether my business can afford a loan?
Start by calculating your monthly net cash flow after the loan repayment: subtract your monthly expenses and the new loan repayment from your monthly revenue. A healthy business should maintain a positive net cash flow with a comfortable buffer. Also check the revenue-to-repayment ratio — most lenders look for a ratio below 30–40% as a sign of manageable debt.
Is business loan interest tax deductible in Australia?
Yes, interest on business loans is generally tax deductible as a business expense, provided the loan funds are used for business purposes. The tax deduction effectively reduces the cost of the loan. For example, at a 25% company tax rate, a $10,000 annual interest cost only costs $7,500 after the tax deduction. This reduces your effective annual cost of the loan.
What is a safe repayment-to-revenue ratio for a business loan?
Most lenders in Australia consider a repayment-to-revenue ratio below 30% as comfortable, 30–50% as manageable but needs scrutiny, and above 50% as high risk. The right ratio depends on your industry and profit margins — businesses with higher margins can sustain higher ratios. Use this calculator to find your ratio and break-even point.