Quick answer
When a bank declines a business loan, it usually means the file didn't fit the bank's policy, not that the deal is bad. Common reasons are a credit default, ATO debt, weak recent financials, unusual security or a tight timeline. Private lenders assess the property, exit and purpose instead, so many bank declines can be funded privately, then refinanced back to a bank later.
Key points
- Ask the bank which part of the application didn't fit
- Private lenders weigh security, exit and purpose over policy rules
- Many bank declines become private approvals within days
- Use the private term to rebuild for a future bank refinance
- Loan size
- $20,000 to $5,000,000
- Credit
- Considered case by case
- Documents
- Low doc options available
- Speed
- Same day possible to $250k
Banks are great. They’re the cheapest long-term money most businesses will ever see, and when your file fits, they’re the right answer. But bank lending is built on policy, and policy is built for the typical borrower on a typical timeline. If you’ve been to your bank and they’ve said no, or “not yet”, you’re in the right place.
Why banks decline business loans
| Reason | What it usually means |
|---|---|
| Credit file | A default, judgment, late payments or too many recent enquiries |
| ATO debt | An outstanding tax debt, especially one reported to credit bureaus |
| Serviceability | Recent financials don’t show enough profit to meet the bank’s ratios |
| Paperwork | Tax returns not lodged, or financials too old |
| Security | Vacant land, rural, specialised commercial or property in a trust |
| Industry | Some industries sit outside a bank’s appetite |
| Timing | The deadline is shorter than the bank’s process |
Most of these say nothing about whether the deal itself is sound. They’re about fit.
Step 1: Ask the bank why
Politely ask your banker which part of the application didn’t meet policy. Was it the credit file, the numbers, the property, the industry or the timing? The answer tells us exactly what a private lender will want explained. It also tells you what to fix for a future bank application.
Step 2: Look at the deal the way a private lender would
Private lenders make decisions with three questions:
- Security. Is there enough equity in property to lend against comfortably?
- Exit. How and when will the loan be repaid?
- Purpose. Is it genuinely for the business, and does it solve the problem?
If you can answer those well, the bank’s reason for declining often becomes a manageable issue rather than a dead end. Our guide to the three questions private lenders ask goes deeper.
Step 3: Choose the right structure
- Need it fast and keeping your home loan? A caveat loan
- Larger amount, longer term, keeping your home loan? A second mortgage
- Clear title or need to replace the existing lender? A private first mortgage
- No property? Look at our unsecured options and bad credit business loans
Step 4: Plan the road back to the bank
The smartest use of a private loan after a bank decline is to buy time to become bankable again. During the term:
- lodge outstanding returns and get current financials prepared
- clear or formalise any ATO debt
- keep every repayment on time
- correct anything wrong on your credit report
Then approach a bank, or a broker, a few months before the private loan ends. A private loan that solved a one-off problem rarely counts against you.
A word on applying everywhere
After a decline, it’s tempting to apply to every lender you can find. Each application can add an enquiry to your credit file, and a cluster of enquiries can make the next lender nervous. It’s better to have one person assess the deal properly and approach only a lender that fits. That’s how we work.
A worked example: from no to yes, then back to the bank
A Mackay mining contractor applied to his bank for $400,000 to buy two trucks and cover working capital for a new contract. The bank declined because the business had a lodged tax return showing a loss from the previous year, when a major client had gone into administration owing it money.
The contractor had a strong order book and owned a house in Mackay plus an investment unit in Townsville. A private lender looked past the loss year because the reason was documented and the new contract was signed. It funded $400,000 on a first mortgage over the unchanged investment unit plus a second mortgage over the home.
The term was twelve months. The business used that time to trade profitably on the new contract, lodge a stronger return and approach its bank again. With a clean year on record and the trucks earning, the bank refinanced the private loan and released the house from security.
What to tell a private lender after a refusal
- exactly what the bank said, ideally in writing
- the reason behind any problem the bank found, such as a loss year or credit default
- what has changed since, or what will change during the loan term
- the property you can offer and what’s owed against it
- how you plan to move back to a bank or otherwise repay
Being upfront about the decline helps more than it hurts. Private lenders deal with these situations every day.
Tell us what the bank said
Share the amount, the property, the deadline and the bank’s reason for declining. We’ll tell you straight whether a private lender is likely to fund it. There’s no credit check when you first enquire, and your file isn’t fired off to a long list of lenders.
Please be candid about the decline reason on the form. It’s the fastest way to the right lender. See if you qualify, or compare private lenders and banks first and then send us the deal.
Frequently asked questions
Will applying to lots of lenders hurt my credit?
Multiple credit enquiries in a short period can make lenders cautious. That's one reason we assess your deal first, without a credit check, and only approach a lender that's likely to say yes.
Can a private lender approve what my bank declined?
Frequently. Private lenders don't use bank scorecards. If the property has equity and there's a believable exit, a default, tax debt or loss year can often be worked around.
Should I just try another bank?
If the decline was about one bank's specific policy and you have time, another bank may say yes. If the issue was credit history, timing or paperwork, other banks will likely see the same problem, and a private loan may be faster.
How do I get back to a bank later?
Fix whatever caused the decline during the private loan's term: lodge financials, clear the ATO, keep repayments perfect. Then refinance with a clear story about what changed.