Bank declined your business loan — what to do next

A bank decline is not a dead end. It feels like one, especially when the deal is time-sensitive or the business need is urgent. But in most cases, a bank decline says more about the bank's risk appetite and process constraints than it does about your deal. If you have a genuine business purpose, a real asset to secure against, and a credible exit strategy, there are options. Our how it works page explains the process we follow when arranging private commercial loans.

Why banks decline business loans

Banks are not monolithic. Each has its own credit policy, risk appetite, and areas of focus. But there are common reasons why a business loan application is declined, even when the underlying deal is sound.

• —Risk appetite mismatch. The bank may not lend against the asset type (for example, vacant land, regional property, or specialised commercial property). Or it may not lend in the quantum or at the LVR you need.
• —Speed. You need the funds in two weeks. The bank's process takes eight. The deal is not wrong; the timeline is incompatible.
• —Complexity. The structure involves a trust, an SPV, cross-collateralisation, or a construction component that the bank's credit team does not have an appetite to assess quickly.
• —Serviceability. The bank's income assessment models are designed for recurring revenue. If your income is lumpy, project-based, or seasonal, the models may not capture it properly.
• —Credit history. A blemish on the director's personal credit file (even a minor one) can trigger an automatic decline in the bank's system, regardless of the quality of the deal.
• —Security type. Second mortgages, for example, are not something most banks offer for business purposes. The bank can only say yes to things it has a product for.

What to do next

The first step is to understand why the bank declined. If you received a written decline, read it carefully. If you only received a verbal decline, ask for the reasons in writing. The reason matters because it determines where to go next.

If the decline was based on policy (for example, the bank does not lend against that asset type or at that LVR), the deal itself may be fine. A non-bank funder with a different risk appetite may approve it on similar or better terms.

If the decline was based on serviceability, the approach shifts. Private funders assess deals differently from banks. They focus on the security, the LVR, and the exit strategy rather than applying a prescriptive income-assessment model. A deal that fails a bank's serviceability test may be approved by a private funder on the strength of the asset and exit.

Non-bank and private lending: how it works

Private lending is not a last resort. It is a different part of the finance market, designed for different situations. When we arrange a loan through our panel of private lenders and investors, the process works differently from a bank application.

• —Deal-focused assessment. The funder looks at the security property, the loan-to-value ratio, and the exit strategy first. The borrower's financials are important but secondary to the asset and the deal logic.
• —Faster timelines. Five to ten business days from term sheet to settlement is standard. In straightforward cases, faster turnarounds are possible.
• —Broader security types. Our panel will consider residential investment, commercial, industrial, mixed-use, and development sites. Both first mortgage and second mortgage positions are available.
• —Entity borrowers only. The borrower must be a Pty Ltd company, corporate trustee, or other body corporate. We do not arrange loans to individuals.

How Private Credit Loans can help

We are a commercial finance broker, not a lender. We arrange loans through a panel of private lenders and investors. Our role is to assess your scenario, identify the most appropriate funder, package the deal, and manage the process through to settlement.

If your bank has declined, we can often tell you within 24 hours whether a private solution is available. We will be direct: if the deal does not work in the private space either, we will tell you that too.

What we need from you

To assess your scenario quickly, we need:

• —A brief summary of the deal: what you need the funds for, how much, and when.
• —Details of the security property: address, property type, estimated value, and whether there is an existing mortgage.
• —The borrowing entity: company name, ACN, and whether it is borrowing in its own right or as trustee.
• —The exit strategy: how will the loan be repaid? Sale, refinance, or other?
• —If available, the bank's decline letter or reasons for decline.

A bank decline is a data point, not a verdict

Banks operate within their own risk frameworks. Those frameworks are designed for volume lending across a broad population. They are not designed for every deal. A decline means the deal did not fit that bank's framework at that time. It does not mean the deal is bad.

Private lending exists precisely for the deals that do not fit the bank mould. If the asset is real, the purpose is genuine, and the exit is clear, there is usually a way forward.

Read more about our process on the how it works page, or submit your scenario and we will give you an honest assessment within 24 hours.