How lenders assess company-director income
Salary and dividends are only part of the picture. Some lenders can consider net profit, retained profit and the wider strength of the business.
Why lender calculations differ
Limited-company directors often control how and when they draw income. A salary-and-dividend calculation may not reflect the full profitability of the business, particularly where funds are retained for tax, working capital or future investment.
Lenders take different approaches to ownership percentage, trading history, recent growth and which accounting figures they will accept.
Information that may be considered
Depending on the lender and structure, assessment may use salary and dividends, share of net profit, profit before or after tax, retained profit or a combination of personal and company information.
- Latest finalised company accounts
- SA302s and tax-year overviews
- Business and personal bank statements
- Accountant's details and explanation of recent changes
- Existing commitments within the company
Presenting the business clearly
Strong applications explain the figures rather than relying on one number. Recent growth, one-off expenses, changes in ownership and cash held in the business may all need context. An adviser familiar with director income can identify lenders whose assessment method fits the case.