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I’m self-employed – how much can I borrow?

A common question asked by self employed clients is “if I pay myself more, can I borrow more?” Simple answer, no.

The conversation with business owners is generally around “I earn a salary of $100,000 per year, how much can I borrow? or “Why do you need my financials, that’s what I pay to the IRD?”


The calculation of “income” for those who are self-employed is different to an “Employee”. The most common question is “if I pay myself more, can I borrow more?” Simple answer, no.


This is where we see business owners blood pressure tend to rise significantly.


We understand your position, your thoughts and frustration. Equally, we understand your accountant’s frustration in obtaining and preparing accurate records, and then there’s the banks and other financial lenders who seems to have other views.

We are experienced in all three, for us it’s all in a day’s work.


The rest of this article blog into it more detail on calculating self employed income – Or just give us a call and we can take it from here.


How we determine income for the self-employed clients:


Yes, this is frustrating and it doesn’t sound logical but that’s where we come in.


As a business owner (own more than 25% in shares in a business), it’s the business profits after some adjustments that dictate your “income” to repay debt.


The calculation of your income is based on the profits of your business, not your declared income for the IRD. Profitability is generally the business Net Profit before Tax with adjustments for various expenses added back. This may include depreciation, interest paid, home office expenses, directors, and shareholders salaries.


Without proper and up to date Annual Financial Statements and management accounts, the actual available income will not be able to be accurately assessed. We always recommend using a qualified Chartered Accountant to manage your accounting functions. Assuming you are an expert in your field, wouldn’t you expect the same from your accountant?


With our experience in the accounting, advisory and auditing fields, we’re uniquely experienced to work alongside you and your accountant in achieving the best possible solution for you.


Call us to discuss how.

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