Affordability vs eligibility: two different lending tests

Eligibility: do you qualify to be considered

Eligibility is the set of basic criteria a lender applies before it even looks at the numbers: being a UK limited company, a minimum trading period, a minimum turnover, sometimes a sector restriction. Fail these and the application stops before affordability is assessed. Check them first to avoid a wasted, credit-file-marking application.

Affordability: can the business repay comfortably

Pass eligibility and the lender turns to affordability — whether your cash flow can service the repayments with a cushion, measured through the debt service cover ratio. This is where strong-looking businesses sometimes fall down, because profit on paper is not the same as cash in the bank.

Where creditworthiness fits

Sitting alongside both is creditworthiness — your record of repaying. A borderline affordability case can be helped by a strong record, and hurt by CCJs or missed payments. See affordability vs credit score.

Check both before you apply

The efficient order is: confirm you meet the eligibility criteria, then sanity-check affordability with a DSCR calculation, then apply. That sequence avoids applications that were never going to succeed.

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