When businesses are looking to obtain financing, lenders want a clear understanding of the company’s existing financial obligations. A Financial Commitments Schedule provides a detailed list of all the recurring payments or debts that a business is responsible for, helping lenders assess the business’s ability to take on and service additional debt.
This schedule is a crucial part of any loan application as it allows lenders to evaluate the business’s cash flow, financial stability and risk profile.
Lenders use the Financial Commitments Schedule to gain a full understanding of your business’s current financial obligations and to evaluate whether the business has the capacity to manage additional debt.
Here’s what lenders are typically looking to establish:
Debt Servicing Capacity: The schedule helps lenders see how much of the business’s cash flow is already committed to repaying existing debts and whether there’s sufficient room to accommodate new loan payments.
Risk of Default: If a business has too many ongoing financial commitments relative to its income, lenders may view it as a higher risk for default.
Cash Flow Impact: Recurring financial commitments can significantly impact a business’s cash flow, so lenders want to know how much money is consistently going out of the business each month or year.
A well-organised Financial Commitments Schedule demonstrates that your business has a clear understanding of its financial obligations, which can help build trust with lenders.
Your Financial Commitment Schedule should list all the business's existing financial obligations, including:
Business Loans: Include details of all outstanding business loans, the remaining balance, repayment amounts, and repayment schedules.
Lines of Credit: List any active credit lines, including limits, balances, and repayment terms.
Mortgages: If your business owns real estate, detail the mortgage payments, outstanding amounts, and terms.
Property Leases: Detail rent payments for business premises, including the length of the lease and any upcoming adjustments or renewals.
Vehicle and Equipment Leases: Include lease payments for machinery, vehicles, or other leased equipment essential for business operations.
Supplier Contracts: If your business has long-term payment agreements with key suppliers, include details of the amounts owed and payment terms.
Insurance Payments: List any regular payments for business insurance policies, including premiums and payment schedules.
Employee Salaries and Benefits: Provide an overview of payroll obligations and any associated benefits or superannuation / pension contributions.
Tax Obligations: Include any recurring State and Federal Government tax obligations (such as GST / VAT / Sales Tax, payroll tax or income tax installments) or any outstanding tax and superannuation debts.
Contingent liabilities are future liabilities that your business might become responsible for should certain events occur. For example, if the business has provided financial guarantees for other entities or if owners have personal guarantees on business debt, these should also be listed.
For each one of the business's financial obligations, you should provide the following information:
1) Description of the item being financed
2) Name of the lender / financier providing the finance
3) Start date of the financing agreement
4) Amount borrowed / financed or the total facility limit in the case of annual facilities for products like trade and invoice finance
5) The type of facility or product
6) The loan / facility / lease period
7) The monthly payment amount
8) The current balance owing
9) Any residual or balloon payment amount on assets and equipment financed
10) Any additional comments or notes you'd like to add for each item.
To make it easy for you, we’ve created an Excel template for a Financial Commitments Schedule. This simple tool will allow you to clearly organise and present all your business’s financial obligations, helping ensure you’re prepared for your next loan application.
