Quick answer
An indicative offer is a lender's early, non-binding outline of the loan it expects to provide, based on the information you've given so far. It usually sets out the amount, term, security, fees and total cost. It isn't an approval: the figures can change once the lender verifies documents, runs credit checks or receives a valuation. A formal letter of offer comes later.
Key points
- Based on what you've told the lender, not yet on verified documents
- Not legally binding on the lender or on you
- Valuations, credit checks and bank statements are the usual reasons figures change
- Comes before conditional approval and the formal letter of offer
Early in a loan enquiry, a lender will often send a short document or email saying, roughly, “based on what you’ve told us, here’s what we could do”. That’s an indicative offer. It gives you a realistic starting point, but it isn’t a promise to lend.
Where it sits in the loan process
Most business loans move through the same stages, even if the labels differ:
- Enquiry. You describe the business, the amount, the purpose and any security.
- Indicative offer. The lender outlines likely terms on that information alone. Some lenders call this a term sheet.
- Assessment. Documents, bank statements, credit checks and often a valuation.
- Conditional approval. Approved subject to specific conditions being met.
- Letter of offer. The formal, binding terms you sign.
- Settlement. Funds are paid out.
An indicative offer is useful because it tells you early whether a deal is in the right range, before you spend time gathering paperwork or paying for a valuation.
What a good indicative offer includes
- loan amount and term
- security required (property, assets, GSA, guarantees)
- every fee, with the total cost of the loan expressed in dollars
- repayment frequency and amount
- the conditions it depends on, such as a valuation or satisfactory credit history
If any of those are missing, ask for them in writing. Vague offers are hard to compare.
A worked example: how a valuation changes the figures
An owner of a Gold Coast property asks for a $200k second-ranking loan to pay suppliers. They estimate the home at $1.1m, with $600k owing to the first mortgage. For illustration, say the lender’s policy allows total borrowing of up to 75% of the property’s value.
| Owner’s estimate | After valuation | |
|---|---|---|
| Property value | $1,100,000 | $980,000 |
| 75% of value | $825,000 | $735,000 |
| Less first mortgage | $600,000 | $600,000 |
| Maximum new loan | $225,000 | $135,000 |
The indicative offer of $200k was reasonable on the owner’s figure. Once the valuer came in at $980k, the same policy only supports $135k. Nothing went wrong; the offer simply did what it says on the label. Use our LVR calculator to test your own numbers before you rely on an estimate.
Curious what an early offer might look like for your situation? Outline your deal for us and you’ll hear back with a ballpark grounded in current lender policy.
Questions to ask before you accept
- What would cause this offer to change, and by how much?
- Will accepting trigger a credit check?
- Are any fees payable before formal approval, and are they refundable?
- How long does this offer remain open?
- Adding every fee, how many dollars will I repay in total?
Comparing two or three offers side by side in the loan cost comparison calculator makes the differences obvious quickly.
Related terms
Loan-to-value ratio, establishment fee, credit enquiry and loan application all affect how an early offer turns into a final one.
Ready for a realistic first look at your loan?
A useful indicative offer starts with accurate information. Filling in our form is a sixty-second job, and nobody pulls your credit report because you asked. Your file also stays with us rather than being blasted out to lenders. A member of our team reads what you’ve sent and rings you personally. Be precise about the amount, the purpose and the security on offer, because a sharper starting picture means the early figure lands closer to the final one.
Frequently asked questions
Is an indicative offer the same as pre-approval?
Not quite. Pre-approval or conditional approval usually follows at least some assessment of your documents and credit file. An indicative offer is earlier and lighter, often based only on what you've said about the business and the security.
Does getting an indicative offer affect my credit score?
Often not, because many lenders issue one before running a credit check. Ask directly. A formal application normally does involve a credit enquiry, which is recorded on your file.
Do I have to pay anything to receive an indicative offer?
Usually no. Some lenders ask for an upfront valuation or application fee once you accept and move to formal assessment. Find out what's payable and whether it's refundable if the deal doesn't proceed.
How long is an indicative offer valid?
It varies, commonly a few weeks. It may say so in writing. If your circumstances or the property market change, the lender may revise it even within that period.
Can I compare indicative offers from different lenders?
Yes, and it's a good idea, as long as you compare total dollar cost over the expected term, including all fees, rather than a single headline figure.