The wage loan’s face amount may exceed the cash you receive
Distinguish nominal principal and repayment obligation from net loan advance after upfront deductions.
Corporate Recovery Partners
01 / 06
The approved figure may not reach the bank
You arrange a short-term loan to cover wages and the approval shows an amount that appears sufficient. Before promising that payroll is funded, confirm the cash actually available after any upfront deductions. The loan's face amount, the amount deposited and the amount you must repay can differ. Have the terms reviewed rather than treating one headline number as all three.
Imagine a business expecting a $50,000 advance while the lender's documents provide for fees or other deductions before payment. Ask for an itemised breakdown and the expected net deposit. Verify who receives each deduction and why. Do not assume the full approved amount can be used for wages merely because that was the purpose described in the application.
business.gov.au recommends understanding contract terms before committing. Give the adviser the advance schedule, fees and repayment terms together. Ask whether the deductions alter the principal or are charged in another way under the actual agreement. The general guidance does not calculate your loan's cost; the documents and proposed cash flows need a specific review.
Use the confirmed net amount and availability date against the actual wage requirement. In the example, a shortfall remains if the deposit is less than the payroll gap, even though the approved loan number matched it. Identify how that difference will be addressed with advice. Do not assume another top-up is available or sensible without assessing the resulting obligations.
Put the required repayments and other relevant charges into the forecast, using the amounts actually payable. Do not reduce the repayment assumption to the cash received if the agreement requires more. Keep any unconfirmed fees visible for clarification. The business needs to understand both the immediate relief and the future outflows created by obtaining it.
If the net advance still does not cover wages or repayments would leave another shortage, seek prompt advice about the company's position. Avoid describing payroll as solved before funds are available. A reliable loan comparison starts with the cash delivered to the business and the obligations created, rather than the reassuring size of an approval headline.
