How Lenders Use Comparable Debt When Evaluating Your Business Loan
- Jared Holmes
- Feb 10, 2025
- 3 min read
Updated: Feb 2
One of the quiet questions happening behind the scenes when you apply for financing is this:
“Has this business ever handled a loan like this before?”
That question is called comparable debt.
It is one of the most important factors in commercial lending, and most business owners have never heard the term.
Understanding how lenders evaluate comparable debt can help you prepare for financing requests and avoid surprises when a deal does not get approved the way you expected.
What Comparable Debt Actually Means
Comparable debt refers to loans or leases you have had in the past that are similar in:
Dollar amount
Structure
Term length
Type of asset or purpose
Lenders look for evidence that you have successfully managed obligations that resemble the one you are requesting now.4
If you are asking for a $150,000 equipment loan but the largest obligation you have ever handled was a $12,000 credit card, that creates hesitation for underwriting.
Why This Matters More Than Your Credit Score
A strong credit score helps, but comparable debt often carries more weight.
A borrower with a 680 credit score who has previously handled two $100,000 equipment leases is often viewed as less risky than a borrower with a 740 score who has never financed anything over $20,000.
What Lenders Look At Specifically
Loan Size and Structure
They compare your requested amount to what you have handled before.
If you have managed:
Vehicle loans
Equipment leases
Term loans
Lines of credit with similar balances
It tells the lender you understand the responsibility that comes with larger payments.
Repayment History
It is not just that you had the debt. It is how you handled it.
On time payments on comparable loans build confidence. Late payments, restructures, or charge offs weaken the picture.
DSCR and Global Cash Flow
For larger requests, lenders also look at whether your business cash flow supported those past obligations comfortably.
They are asking:“Did the business struggle under that debt, or was it managed easily?”
Industry and Asset Type
If you financed a dump truck before and are now requesting financing for a skid steer, that is comparable.
If you previously financed restaurant equipment and now want heavy construction equipment, lenders may view that differently because the industry and asset risk profile changes.
Why Deals Sometimes Get Approved Smaller Than Requested
This is one of the most common frustrations for business owners.
You apply for $200,000 and get approved for $85,000.
Often, this is not about credit. It is about comparable debt. The lender is comfortable approving you up to the largest level you have proven you can handle.
How to Use Comparable Debt to Your Advantage
You can plan around this.
If you know you will need a larger financing request in the future, it can help to:
Start with smaller equipment loans
Build history with term debt instead of relying only on credit cards
Maintain strong payment history on those accounts
Over time, you create a track record that supports larger approvals.
The Bottom Line
Comparable debt is lenders asking for proof, not promises.
They want to see that you have handled similar financial commitments successfully before approving larger requests.
When you understand this, you can structure your borrowing history intentionally and avoid surprises when applying for financing.
If you are unsure whether your current credit profile supports the size of request you have in mind, it is worth reviewing before you apply.
About the Author
Jared Holmes is the founder of Brilliance Funding Partners, where he helps business owners navigate the commercial lending landscape with confidence. With 9 years of hands-on experience in SBA lending, equipment financing, and working capital solutions, Jared focuses on asking the right questions and delivering financing strategies that make sense for each business. Connect with Jared for a personalized conversation about your options.
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