Writing an accountant letter for a client's business loan

Sooner or later a client asks for “a letter for the bank”. It sounds simple, but the request sits at an awkward point: the client needs the letter to secure finance, the lender is going to rely on it, and your name is at the bottom. This page approaches the accountant letter from your side of the desk — what to confirm, what to leave out, and how to word it so it’s useful without stretching beyond what you know.

When do lenders ask for an accountant letter?

Lenders typically request a letter when:

• The latest tax return isn’t lodged yet and they need confirmation of income for a recent period
• The loan is a low-documentation product, often property-secured, that relies on a letter instead of full financials
• Income needs context — for example, a trust distribution or a one-off loss
• They want independent confirmation that lodgements are up to date and there’s no undisclosed ATO debt

If the lender has full financial statements and tax returns already, a letter may not be needed at all. It’s worth asking the client what exactly the lender has requested before drafting anything.

The principle: confirm facts, not judgements

The safest and most useful letters stick to things you can verify from your own records. A useful test for every sentence: could I show the lender the document this statement comes from?

Usually appropriate to confirm	Usually best avoided
You act for the client and since when	That the client “can comfortably afford” the loan
Which returns you prepared and lodged	Forecasts presented as fact
Income or turnover shown in those returns or BAS	Figures you haven’t reviewed
That lodgements are up to date (or which are outstanding)	Statements about the client’s character or reliability
The ATO account position as at a stated date	Assurances about future tax liabilities

Serviceability — whether the business can meet repayments — is the lender’s judgement. Your job is to give them reliable facts so they can make it.

A structure lenders generally accept

1. Letterhead, date, and addressee — the lender’s name, or “To whom it may concern” only if the client hasn’t chosen a lender yet
2. Who you are — your name, firm, registration as a tax agent or BAS agent
3. Relationship — that you act for the named entity and its principals, and since when
4. What you prepared — the returns or BAS you lodged, with the periods
5. The facts confirmed — each figure with its source and period
6. Lodgement and ATO status — as at a specific date
7. Basis and limitations — that the letter relies on information provided by the client and your records, and is provided at the client’s request for the stated purpose
8. Signature — yours, with contact details

An illustrative wording

“We confirm that we have acted as tax agent for [Entity] (ABN [number]) since [year]. We prepared and lodged the entity’s income tax returns for the years ended 30 June [year] and 30 June [year]. Those returns show net business income of $[amount] and $[amount] respectively. As at [date], all activity statements and income tax returns due for the entity have been lodged, and the ATO account shows [no amount overdue / a balance of $[amount] subject to a payment plan entered on [date]]. This letter is provided at the request of our client for the purpose of a business finance application and is based on our records and information provided by the client.”

Adapt to your firm’s standard wording and professional obligations. You can check your own registration details, and your client can check yours, on the Tax Practitioners Board register.

Get the authority first

Before you send any letter, get your client’s written authority. It protects you and makes clear who the letter is for. Our owners’ page on letting the accountant talk to the lender includes a simple form of words the client can use.

Letters when returns aren’t lodged yet

The trickiest requests come when the latest year isn’t finalised. In that case, consider:

• Confirming the last lodged year in full
• Providing management accounts for the current period, clearly labelled as unaudited
• Confirming BAS turnover for recent quarters you’ve lodged
• Stating plainly that the current-year return is in preparation

Our guide to interim financials before the tax return covers this scenario in depth.

Common mistakes in accountant letters

• Rounding without saying so. If you round figures, say “approximately”.
• No date for the ATO position. Account balances change; always specify “as at”.
• Mixing entities. If the group has several entities, name the one each figure relates to.
• Copying the lender’s template blindly. Read every line. Remove anything you can’t stand behind.
• Leaving out known issues. If there’s an ATO balance, say so factually. Lenders find it anyway, and an omission damages trust in the whole letter. See explaining red flags.

Point your client to the right lender

A well-written letter is only useful if the client is applying to a lender that accepts it. If your client hasn’t settled on one, start the enquiry with them and note that you’re their accountant. There’s no credit check to enquire, the file goes to one suitable lender rather than a crowd, and a real person calls your client first. Ask them to fill the form in accurately so we can link the file to a lender that works with the documents you can provide. Refer your client now.