How to build a cash flow forecast for a business loan

A credit assessor reading your forecast is asking one narrow question: after this loan lands, will there be enough cash in the account, every single month, to make the repayment? Your profit figure doesn’t answer that. A good forecast does, and it shows you understand your own business well enough to be trusted with someone else’s money.

This guide walks through building one from a blank spreadsheet, in the order that keeps the numbers honest. It’s written for owners who’ll do the first draft themselves, then perhaps hand it to an accountant to tidy.

When does a lender actually want to see a forecast?

Not every application needs one. Plenty of non-bank and online lenders size smaller unsecured loans on recent bank statements and turnover alone, because the past few months already show how the business behaves.

A forecast becomes important when the past doesn’t tell the whole story:

• The loan funds change. A second site, a new truck, an extra crew, a fit-out. Repayments will come from income that doesn’t exist yet.
• The business is young. With less than a couple of years of history, the lender has to rely on what you expect.
• The amount is large relative to turnover. Banks in particular will want to see repayments mapped against expected trading.
• Timing is unusual. Seasonal businesses, contractors with progress claims and anyone waiting on a big receivable need to show the dips are planned for.

If you’re applying to a bank, assume you’ll be asked. Banks are often the cheapest source of business credit, and a clear forecast is one of the simplest ways to meet their criteria.

Step 1: set up the sheet the way assessors read it

Keep it plain. Twelve monthly columns across the top, starting with the month the loan is expected to settle. Down the side, in this order:

1. Opening bank balance
2. Cash receipts, line by line
3. Total receipts
4. Cash payments, line by line
5. Total payments
6. Net movement for the month
7. Closing bank balance (which becomes next month’s opening balance)

That’s essentially the structure of the free Excel template on business.gov.au, which is a sensible starting point if you don’t want to build formulas yourself. The government guidance makes two small points worth copying: label which figures are estimates, and state at the top whether amounts include or exclude GST.

Use your real balance on the day you start, taken from the bank, not the ledger. An opening figure that doesn’t match the statements the lender already holds raises an eyebrow before anyone gets to month two.

Step 2: forecast receipts from evidence, not hope

Receipts are where most forecasts go wrong, usually by being too optimistic about timing rather than amount.

Start with the last 12 months of actual deposits by month. That gives you the seasonal shape for free. Then adjust:

• Debtor timing. If customers are invoiced on 30-day terms but typically pay in 45, a March sale is May cash. Your aged receivables report will show the real pattern.
• Known contracts. List them separately, with the expected payment months. Lenders like to see a named source rather than a lump labelled “new business”.
• Growth. If you’re projecting growth, tie it to something specific: the new location’s opening date, the second truck’s first full month, the signed supply agreement. Ramp it up gradually.
• Loan proceeds. Show the loan as a receipt in the settlement month, on its own line, so it isn’t confused with trading income.

Leave out anything uncertain, such as a hoped-for grant or an insurance claim still in dispute, or show it in a separate optimistic version. A forecast that only balances if a maybe-payment arrives is a forecast built on a maybe.

Step 3: put the lumpy payments in their real months

Regular costs such as rent, wages and subscriptions are easy. The payments that sink forecasts are the irregular ones, and assessors scan for them deliberately.

Payment	Where it belongs in the forecast	Why it matters
BAS (quarterly)	For self-lodgers, the 28th of the month after each quarter ends, except the December quarter, which is due on 28 February	Quarterly GST and PAYG withholding can be one of the largest single outflows in the year
PAYG income tax instalments	Usually on the same BAS dates	Often forgotten when the BAS is prepared by someone else
Super	Every pay cycle since payday super began on 1 July 2026	No longer a quarterly lump, so it now sits beside wages each week or fortnight
Insurance premiums	The renewal month, unless you use premium funding	A single annual premium can wipe out a thin month
Registrations and licences	Their due dates	Vehicle rego, trade licences and software renewals cluster
Income tax on lodgement	When the assessment is due	Larger for profitable sole traders and companies after a strong year
Existing loan and lease repayments	Every month they’re debited	Leaving one out is treated as an error, not an oversight

The super change deserves a second look. Until mid-2026, a lot of small employers settled super once a quarter, so two months in every three looked roomier than they really were. Now the money has to arrive in each worker’s fund shortly after every pay run. A template copied from last year that still shows a quarterly super lump is out of date, and an attentive assessor will spot it.

Tax debt also bites harder than it used to. Interest the ATO charges on late tax can’t be claimed as a deduction for income years starting on or after 1 July 2025, so a forecast that quietly rolls an ATO balance forward is understating what that debt costs. If you have an arrangement in place, show the instalments as their own line. Our ATO tax debt business loans page covers how lenders view those plans.

Step 4: add the loan, then test it

Now insert the proposed facility. Two lines: the drawdown as a receipt in month one, and the repayment as a payment in every month it applies. If you don’t yet know the exact repayment, the business loan repayment calculator gives a working figure. Include any fees deducted at settlement, so the receipt reflects what actually arrives.

Then build a cautious version of the same sheet. Copy the tab and change three things:

• trim receipts by a meaningful amount in every month (think about what a genuinely bad quarter looked like for you)
• push your biggest debtor’s payments back by a month
• add a cost overrun to whatever the loan is funding

If the closing balance in the cautious version still stays above zero, or dips briefly and recovers with a buffer you can explain, you’ve done most of the lender’s stress testing for them. If it doesn’t, you’ve learned something important before signing anything: the amount, the term or the product may need to change.

Many lenders also boil this down to a coverage figure: how many times the cash available for repayments covers the repayments themselves. Our debt service coverage ratio calculator works it out, and the guide to what lenders mean by serviceability explains how assessors read the result.

Not sure your forecast supports the amount you had in mind? Send us a quick outline and we’ll talk it through; asking won’t touch your credit file.

Step 5: write the assumptions page

A single page, or a block at the bottom of the sheet, listing each assumption in a sentence. For example:

• Receipts based on the last 12 months of deposits, adjusted for the loss of one customer in August
• Debtors assumed to pay in 42 days on average, per the September aged receivables report
• Second van on the road from February, generating revenue from March at half the first van’s monthly average, rising to full by May
• Wages include a 3.5% award increase from 1 July (illustrative; use your own award’s figure)
• All figures include GST; net GST shown in BAS months

This page is often the most persuasive part of the forecast. It tells the assessor you’ve thought it through, and it lets them challenge a single assumption without doubting the whole document.

A worked example: a plumbing business adding a second van

Here’s an illustrative case. A Brisbane plumbing company, two years trading, averages about $62k of monthly deposits. The director wants $95k to fit out a second van with a drain camera and jetter and to cover the new plumber’s wages for the first eight weeks.

Her first draft showed receipts jumping by $30k a month from the van’s first week. Her accountant pushed back: new crews take time to fill a diary. The revised forecast ramps the second van in over three months, which shows a tight December when the quarterly BAS, Christmas wages and the new repayment all land together.

Rather than hide it, the forecast shows the December closing balance at around $9k and notes that the business will hold back a planned tool purchase until January. The cautious version, with receipts trimmed and the largest builder client paying a month late, still stays positive with that adjustment in place.

The point isn’t that the business looks perfect. It looks understood. The lender can see the one tight month, the reason for it and the plan, and can size the loan with confidence. A forecast showing $30k of extra income in week one would have invited doubt about every other number on the page.

Mistakes that undermine an otherwise good forecast

• Starting from profit. Depreciation, accruals and unpaid invoices don’t move cash. Build from the bank account.
• Flat lines. Identical receipts every month signal guesswork in almost any business. Use your real seasonal pattern.
• Forgetting the owner. Drawings or director wages are a real outflow. Leaving them out makes the business look more cash-rich than it is.
• Rounding everything to the nearest $10k. Precision isn’t the goal, but suspiciously round numbers suggest little thought went in.
• Ignoring existing facilities. Every lease, card and loan repayment belongs in the payments section. Undisclosed debts tend to surface on credit checks and bank statements anyway, and the cash flow mistakes that hurt loan applications usually start here.
• Building it once. Update it monthly against actuals. If the lender comes back with a question in three weeks, a current version answers it instantly.

If your forecast reveals a gap in the trading cycle rather than a one-off need, a revolving facility might suit better than a term loan. The cash flow gap calculator and our page on working capital loans help you tell the difference.

Your forecast is done. What’s the next move?

A finished forecast is the strongest position to borrow from: you know the amount, the month it’s needed and the repayment the business can genuinely carry. Plenty of owners start an application without one, so you’re already a step ahead.

Our form is about sixty seconds of typing. Sending it is not a credit application, and no bureau gets pinged. What you share is read by one team here, not handed around a panel of funders, which means your mobile stays quiet apart from us. A lending specialist goes through your figures and rings to discuss them. Copy the amounts straight from your spreadsheet, closing balances and all; the closer the form matches the forecast, the more likely the first lender we suggest is the one that fits.

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