Workable Indication in 2025: A Guide for Australian Borrowers & Lenders

In a lending market shaped by rising rates and tighter credit, understanding the term ‘workable indication’ can be a crucial advantage for Australian businesses and borrowers. But what exactly is a workable indication, and how does it affect your next loan negotiation in 2025?

What is a Workable Indication?

A ‘workable indication’ is a preliminary, non-binding estimate provided by a lender or broker that outlines the likely terms—such as interest rate, loan amount, and structure—that could be available to a borrower based on the information provided. Unlike a formal approval or a credit offer, a workable indication is an early-stage signal. It helps both parties determine if pursuing a full application is worthwhile, saving time and resources.

In 2025, with the Reserve Bank of Australia (RBA) maintaining a cautious approach to inflation and banks tightening lending criteria, workable indications have become a key first step in the finance process for everything from business equipment loans to property finance.

Why Workable Indications Matter in 2025

The Australian lending environment has shifted significantly in the past year. Key drivers include:

• Stricter serviceability checks: Major banks and non-banks are scrutinising borrowers’ cash flow, debt-to-income ratios, and sector risks more closely than in previous years.
• Regulatory changes: Updates to the Consumer Credit Code and the rollout of Open Banking have given lenders more data, but also more compliance hurdles.
• Rising cost of funds: The cost for banks to access wholesale funding has increased, impacting rates offered to consumers and businesses.

In this climate, a workable indication gives borrowers early clarity. For example, a small business looking to finance a new fleet of vehicles might approach multiple lenders. Each lender provides a workable indication—such as ‘up to $500,000 at 7.2% over five years, pending full assessment.’ This allows the business owner to assess feasibility, compare options, and avoid damaging their credit score with multiple formal applications.

How Borrowers and Brokers Use Workable Indications

Workable indications aren’t just helpful—they’re strategic. Here’s how they’re typically used:

• Initial Decision-Making: Borrowers can quickly filter out lenders whose terms won’t fit their needs, and focus on the most promising options.
• Negotiation Leverage: Armed with several workable indications, a borrower can negotiate better terms by showing what competitors are willing to offer.
• Managing Expectations: Brokers use workable indications to set realistic expectations with clients about what’s possible, based on market conditions and current lender appetites.

For example, in the property development sector, where loan-to-value ratios (LVRs) have tightened in 2025, a workable indication might highlight whether a developer can expect 65% or 70% LVR, and at what cost. This allows for earlier recalibration of project budgets and funding strategies.

Limitations and What’s Next

It’s important to note that a workable indication is not a guarantee. Changes in market rates, lender risk appetite, or new information about the borrower can all result in revised terms—or a declined application—at the formal credit assessment stage.

In 2025, digital platforms and brokers are increasingly automating the indication process, using Open Banking data and AI-driven credit models. This means workable indications are becoming more accurate and personalised, but borrowers should still treat them as guides, not promises.

Real-World Example

Consider an SME in Melbourne seeking asset finance for new manufacturing equipment. The business provides basic financials to three lenders via their broker:

• Lender A: Indicates $250,000 at 6.9% fixed, up to 60 months.
• Lender B: Indicates $300,000 at 7.5%, but only for 48 months.
• Lender C: Indicates $275,000 at 7.2%, pending review of last year’s tax returns.

With these workable indications, the business can make an informed decision about whether to proceed, what terms to negotiate, and which lender is most likely to deliver a formal approval aligned with their needs.