Quick answer
Before adding any repayment to your stack, test it against a slow scenario: sales 20–30% below plan, customers paying two to four weeks later, a GST return and provisional tax instalment in the same month, and a surprise cost. If the business can still meet all repayments, wages and tax from its own cash flow, the stack passes. If not, shrink the ask, lengthen the term or rethink the goal.
Key points
- Test every repayment together, not one facility at a time.
- Model slower sales, later payments and bunched tax dates.
- A stack that only works in the best case is too heavy.
- Fixes: borrow less, lengthen the term, add equity or delay the goal.
- Test case
- Slower sales, later payments, bunched tax
- Pass
- All repayments, wages and tax still met
- Fail fixes
- Smaller ask, longer term, more equity
A funding stack can look perfect on paper and still fall over in a bad month. The reason is almost always the same: the plan was tested only against the plan. The repayment load test is a simple habit that asks a harder question — what happens to all the repayments together when things go slower, later and lumpier than expected?
Why test repayments together?
Each facility in a stack comes with its own schedule. Equipment finance might be monthly, a line of credit might need interest each month, a short unsecured facility might have weekly repayments, and property-secured funding might be monthly or interest-only for a period. Lenders look at their own repayment; you’re the only one who sees them all at once, alongside wages, rent, GST and provisional tax.
How do you run the test?
Start from your cash flow forecast — the one you built to size your funding gap — and add every repayment from every facility, existing and proposed. Then apply four stresses:
| Stress | What to change | Why |
|---|---|---|
| Slower sales | Reduce new revenue from the goal by 20–30% | Growth plans are optimistic |
| Later payments | Push customer receipts back two to four weeks | Debtors slip, especially in tight times |
| Bunched tax | Put a GST return and provisional tax in the same month | They often coincide (for example, 15 January for many businesses) |
| A surprise | Add one unplanned cost — a repair, a lost customer | Something always happens |
Then check each month of the forecast. business.govt.nz recommends pessimistic, realistic and optimistic scenarios; this is your pessimistic case made concrete.
What counts as a pass?
The stack passes if, in every month of the stressed forecast:
- every repayment is met;
- wages, PAYE and KiwiSaver deductions are met;
- GST and provisional tax are met on time, or a formal instalment arrangement is already in place;
- the bank balance (plus any undrawn buffer facility) stays above a minimum you’re comfortable with.
If any month fails, the stack is too heavy for the business as it stands.
Which tax dates trip people up?
For a business with a 31 March balance date using the standard provisional tax option, instalments fall on 28 August, 15 January and 7 May. GST returns are due on the 28th of the month after each period, except the period ending 31 March (due 7 May) and the period ending 30 November (due 15 January). That means 15 January and 7 May can each carry both a GST payment and a provisional tax instalment — often in quiet or post-holiday months. Put them in the test explicitly. Our GST and provisional tax remix covers ways to smooth them.
Illustrative test: a Tauranga marine services business
Illustrative only; describes no real business.
A boat maintenance business plans a $180,000 workshop expansion funded with equipment finance (monthly), a short unsecured facility (weekly) and owner cash. Existing commitments: a vehicle loan and the workshop lease.
- Plan case: comfortable surplus every month.
- Stressed case: winter work slows, two large customers pay a month late, and 15 January carries GST and provisional tax together. July and January dip below zero.
The fix: the owner extends the equipment finance term, cuts the unsecured facility by $30,000 by selling an idle trailer and a spare outboard, and sets up a small line of credit as a buffer for winter. Re-run, the stack passes.
If you’d like a real person to look at your stack’s repayments, start an enquiry — enquiring doesn’t touch your credit file.
What can you change if the stack fails?
- Borrow less. Push more of the goal onto non-loan pieces — see ordering your funding sources.
- Lengthen the term on the long-lived parts so repayments are smaller, as long as the term doesn’t outlast the asset.
- Change the mix of secured and unsecured pieces — secured funding often allows longer terms.
- Add equity for the riskiest part of the goal.
- Phase the goal so you need less at once.
- Arrange IRD timing in advance if tax dates are the pinch point.
How do lenders run their version?
Lenders apply their own tests — often a ratio comparing the cash the business generates with its debt repayments, plus a look at bank statements for dishonours and overdrawn days. They won’t see your full stack unless you show them. Presenting a stressed forecast in a one-page funding plan shows you’ve done the work and makes a sensible request easier to approve. Read when a loan is the right piece alongside this test.
Which warning signs say a stack is already too heavy?
You don’t need a forecast to spot some of them. If any of these sound familiar, run the test before adding anything new:
- The line of credit hasn’t returned to zero in months.
- Supplier accounts are regularly paid late, or a supplier has put you on stop.
- GST or PAYE has been paid late more than once in the past year.
- You’ve taken a new short-term facility to make repayments on another one.
- The owners have stopped drawing a regular wage to keep the business afloat.
- Monthly repayments across all facilities have grown faster than revenue.
None of these means the business is in trouble on its own. Together, they suggest the stack needs simplifying before it grows — possibly through consolidation into one longer facility with a clear plan.
Ready to add the piece that passes?
If your stack passes the load test, the loan piece is on solid ground. Tell us about the goal, the stack and the gap. There’s no credit check to start, your enquiry isn’t pushed out to a crowd of lenders, and a real person will talk through the repayments with you. Please include your existing repayments on the form — accurate figures help us find a structure that fits first time.
Frequently asked questions
How do I know if my business can afford a loan?
Add the new repayments to your cash flow forecast alongside existing repayments, wages, rent and tax, then test a pessimistic scenario. If the business still covers everything with a buffer, it can likely afford it.
What is a debt service cover ratio?
A measure lenders use comparing the cash a business generates with its debt repayments. A business that generates comfortably more than it needs to repay is seen as lower risk. Lenders calculate it in different ways.
What should I do if my repayments fail the stress test?
Reduce the amount borrowed by using more non-loan pieces, extend the term so repayments are smaller, bring in equity for part of the goal, or phase the goal so less is needed at once.
Should tax payments be part of the stress test?
Yes. GST returns, provisional tax instalments and employer deductions are fixed obligations, and they often land in the same months. Include every tax date in the test.