Maintenance capex
What is maintenance capex, and why does a lender separate it from growth capex?
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BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
Maintenance capex is the investment a business has to make just to keep its existing capacity working — replacing vehicles, plant and systems as they wear out — as distinct from growth capex, which adds capacity. A lender separates the two because maintenance capex is not optional: it comes out of cash flow before anything is available for debt service, and a business that defers it can show flattering cash flow for years while its assets age. The tells are capex running persistently below depreciation, and a request for growth capex that is partly overdue replacement.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
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