Quick answer
When a bank decides not to renew a business facility, the whole balance falls due at expiry even if every repayment was made. Under the Banking Code of Practice, a covered small business customer who is not in default must get at least three months' notice. An interim private first mortgage can pay the bank out at expiry, giving time for another bank to assess the business properly.
Key points
- A non-renewal is not a default, but the balance is still due on the expiry date
- The Banking Code requires at least three months' notice for covered small business loans not in default
- Start the refinance the week the letter arrives, not in the final fortnight
- An interim private first mortgage can pay out the bank and run from 1 to 24 months
- No formal valuation required, so the new loan isn't held up waiting on a report
- Amounts
- $20k – $5m
- Structure
- Usually a private first mortgage
- Term
- 1 to 24 months
- Interest
- Can be prepaid or capitalised
The letter is usually polite. It thanks you for your business, notes the facility’s expiry date, and explains that the bank will not be offering a renewal. There may be no default, no missed repayment and no warning. Yet the effect is blunt: on the expiry date, the full balance is due.
This is one of the most common reasons established businesses turn to private lending. The fix is rarely complicated. It needs to start early, and it needs an honest exit.
How much time is left before the facility expires?
Count from today to the expiry date in the letter, then work backwards. A new bank usually needs weeks to assess, approve and settle. A private refinance can settle quickly once documents are in, but you do not want to be testing that in the last few days.
| Time to expiry | What is realistic | First move |
|---|---|---|
| More than 3 months | Go straight to a new bank, with a private refinance as the backstop | Get the bank’s reasons in writing and update your accounts |
| 6 to 12 weeks | Run a new bank application and a private interim loan side by side | Ask your accountant for current figures; request a payout estimate |
| 2 to 6 weeks | A private first mortgage that pays the bank out at expiry | Send the facility letter, payout estimate and property details now |
| Under 2 weeks | A private refinance only, with documents in this week | Ask the bank in writing for a short extension while it settles |
| Expiry has passed | You are likely in default | Read refinancing a loan in default |
Funding is possible within 24–48 hours once documents are in. The bank’s discharge process and payout letter are usually the slowest part, so request them early.
What does the Banking Code say about non-renewal?
The Banking Code of Practice is the industry code most Australian banks subscribe to. The 2025 version, approved by ASIC in June 2024, has a section on lending to small business. Several paragraphs bear directly on a facility the bank will not renew:
- Notice of non-renewal. If you are not in default and the loan will not be repaid in full by its regular repayments, the bank will give notice of its decision not to extend at least three months before you need to repay in full (paragraph 93).
- No promise of the same terms. If the bank does extend or refinance, it is not required to do so on the same terms (paragraph 94).
- Notice before enforcement. For a payment failure, the bank will generally give at least 30 days’ notice before demanding repayment or starting enforcement (paragraph 82); for other defaults, at least 30 days’ notice and a chance to remedy where possible (paragraph 88).
- No vague “material adverse change” defaults in standard form small business loan contracts (paragraph 92).
Who counts as a small business? Under the Code’s test, the business group had annual turnover under $10m in the previous financial year, has fewer than 100 full-time equivalent staff and owes under $5m in total to all credit providers. Bigger facilities rely on the contract terms instead.
The practical point: three months is a minimum, not a comfortable runway. Use all of it.
Which kind of letter have you received?
Banks use similar language for very different situations. Read the letter closely, because the right response changes with it.
| What the letter says | What it usually means | Typical private-lending response |
|---|---|---|
| “We will not be renewing the facility at expiry” | Non-renewal; the balance is due on the expiry date | Interim private first mortgage that pays the bank out |
| “We will renew at a reduced limit” | Partial exit; the bank wants a paydown | Second mortgage or caveat to fund the reduction, with the bank’s consent |
| “We require additional security” | The bank wants more cover before renewing | Sometimes a second property offered to the bank solves it without private money |
| “You are in breach of covenant” | A possible default, not just expiry | Legal advice first; then a refinance if the default can’t be cured |
| “Demand for repayment” | Enforcement may follow | Urgent; see stopping a mortgagee sale |
If the letter mixes more than one of these, ask the bank to clarify in writing. A new lender will ask the same question.
How it works: an interim private first mortgage
- Read the letter with your accountant. Is this non-renewal, a reduced limit, or something closer to default?
- Get a payout estimate from the bank, including any break costs and discharge fees.
- Enquire with the property details. We assess the property directly, with no formal valuation required.
- Letter of Offer. It sets the amount, the term (1 to 24 months for a first mortgage), the interest arrangement and the fees.
- Settlement on or before expiry. The private lender pays out the bank and registers its first mortgage.
- Refinance to a new bank inside the term, with fresh accounts and no deadline hanging over you.
Our page on refinancing out of a bank into a private first mortgage covers the mechanics of a bank payout in more detail, and the pillar on private first mortgage business loans covers terms and security.
How does this compare with the alternatives?
| Option | Beats the expiry date? | Trade-off |
|---|---|---|
| Ask the same bank to reconsider | Sometimes | Paragraph 94 means any renewal can be on new terms |
| Apply to a new bank | If you start early | Weeks of assessment; the exit letter may raise questions |
| Non-bank lender | Often | A middle ground in cost and speed; see non-bank business lenders |
| Interim private first mortgage | Yes, if equity supports it | Higher cost for a short period; needs a clear refinance exit |
| Sell the property | Rarely on time | Forced timing can cost far more than interest |
Who it suits
- Established businesses whose bank is exiting a sector, location or property type
- Owners of commercial, industrial, retail or investment property securing the facility
- Borrowers whose bank will only renew at a reduced limit
- Companies, trusts and individuals borrowing for business purposes
- Businesses that expect a new bank to say yes once they are not racing a deadline
When this isn’t the right move
- The business is loss-making with no turnaround in sight. A new bank will not refinance it later either. Speak to your accountant about the bigger picture first.
- The bank will renew on acceptable terms. If the new terms are workable, take them; private money is for when they are not.
- The facility is mostly unsecured. Without property to secure it, a property-secured refinance is not available.
- The real issue is a covenant default. Get legal advice on the bank’s letter before you treat it as a simple expiry.
What it costs (without the guesswork)
There is no published price because every loan is different. Pricing is set on each deal’s security, loan-to-value ratio, term and exit, and we aim for the sharpest price your situation allows. Expect these items:
- Interest for the interim term, which can be prepaid or capitalised
- A small assessment fee, varying per loan and shown on the Letter of Offer
- Legal and registration costs for the new mortgage
- The bank’s own discharge and any break costs, which the new loan can cover
Documents you’ll need
- The bank’s non-renewal letter and the facility agreement
- A payout estimate from the bank
- Photo ID for borrowers, directors, guarantors and security owners
- Company or trust documents (see company or trust-owned property)
- Recent financial statements, enough to show the refinance exit is realistic
- Any talks already under way with a new bank or non-bank lender
How fast can it settle?
Faster than most borrowers expect, provided the bank’s payout letter arrives on time. Funding is possible within 24–48 hours once documents are in, and there is no formal valuation required, so there is no queue for a third-party property report. If expiry is close, send the letter and the property details today.
Illustrative example: replacing an exiting bank
Illustrative example: a Perth medical group owns its clinic building, worth about $3.2m, with a $1.9m bank facility. The bank writes in April saying it will not renew at expiry in July, citing a change in its health-sector appetite. The group’s accountant expects a new bank to take three to four months once the June accounts are finished. A private first mortgage at an illustrative LVR band of 70% gives $2.24m of capacity.
| Step | Amount |
|---|---|
| Private first mortgage capacity | $2.24m |
| Less bank payout including break costs | $1.94m |
| Less capitalised interest allowance for nine months (illustrative) | $210k |
| Less loan costs | $25k |
| Left over | $65k |
The loan pays out the bank on time with room to spare, interest is capitalised so the clinic’s cash flow is untouched, and the new bank refinances it in month six. This is an illustration, not a client record.
What makes the bank refinance exit believable?
A private lender wants to see more than “we’ll find a new bank”. Useful evidence includes a broker’s or bank’s indicative interest, accounts showing the business services its debt, and a clear explanation of why the old bank left. Our guide on why banks decline business loans shows what new banks look for, and private lender vs bank explains where each fits.
Key terms
- Facility expiry: the date a business loan’s term ends and the balance becomes payable unless renewed.
- Non-renewal: a bank’s decision not to extend a facility at expiry, even where repayments are up to date.
- Payout figure: the bank’s written statement of everything needed to discharge its mortgage on a given day.
- Interim refinance: a short private loan that clears the bank and is itself repaid by a longer-term lender.
- Financial indicator covenant: a loan term tied to measures such as interest cover or gearing, allowed by the Code for development and specialised loans.
Other urgent situations we fund
Based in WA? Our page for a private lender in Perth covers Landgate and local security detail. See also the glossary entry on the first mortgagee.
Exit letter on your desk? See if you qualify
Tell us the expiry date, the payout figure (or your best estimate), the property securing the facility and anything else you could offer. There’s no credit check to enquire, your details are not shopped to a dozen lenders, and a specialist at our lending partner fundU reads every enquiry.
Exact answers about the property and what is owing on it mean the first call can tell you whether an interim refinance works, and how much room it leaves. Start the refinance enquiry.
Frequently asked questions
My bank says it won't roll over our $1.8m commercial loan when it expires in ten weeks. We've never missed a payment. Why?
Banks exit facilities for reasons that have nothing to do with your payment history: a change in appetite for your industry or location, the property type, a portfolio review, or a covenant the bank now reads differently. Ask for the reason in writing, because it tells a new lender what to address.
How much notice does the bank have to give?
For a small business loan covered by the Banking Code of Practice, where you are not in default, the bank must give notice of its decision not to extend at least three months before you need to repay the loan in full. Larger facilities depend on the loan terms, so check your facility agreement.
Does the Banking Code cover my business?
The Code's small business test looks at the business group's annual turnover (under $10m in the previous financial year), staff (fewer than 100 full-time equivalents) and total debt to all credit providers (under $5m). Your bank must also subscribe to the Code. Ask the bank to confirm in writing whether your facility is covered.
Can a private lender refinance the whole facility and give us time to find a new bank?
Yes. A private first mortgage over the property that secures the bank loan can pay the bank out on expiry, for a term of 1 to 24 months. The new bank refinance is then the exit.
The bank will renew, but only at a much lower limit. Can you fund the reduction?
Often, yes. If the bank stays on as first mortgagee, a second mortgage over the same or another property can fund the amount it wants paid down. That requires the bank's consent or a workable priority arrangement, so raise it with the bank early.
Can I complain about the bank's decision?
You can raise it with the bank's internal dispute team, and eligible small businesses can take a complaint to AFCA after that. AFCA cannot consider a complaint about a small business credit facility over $5m. A complaint may not change the expiry date, so run the refinance in parallel.
We have a property development facility with financial covenants. Is that treated differently?
The Banking Code allows property development and specialised lending to include financial indicator covenants tailored to those loans. If a covenant breach is behind the bank's stance, the conversation may be about default rather than non-renewal, so get your solicitor to read the letter.
Our overdraft is being cancelled at the same time. Can a property-secured loan replace it?
A private loan is a lump sum for a set term, not a revolving limit. It can repay the overdraft and leave working capital in the account, with interest prepaid or capitalised, while a new bank sets up a fresh facility.
Will having been exited by a bank make other banks nervous?
Sometimes. That is why an interim private loan helps: it removes the deadline, so you can present to a new bank with clean, current accounts rather than in a rush. Our guide to why banks decline business loans covers what they look at.
What if the facility has already expired and the bank has issued a demand?
Then you are dealing with a default and possible enforcement, and the timing is tighter. See our page on refinancing a loan in default, and move today.
Can our trust-owned property secure the refinance?
Yes. Property owned by a company or a trust can secure a loan for a business purpose. We will need the trust deed and confirmation of the trustee's power to borrow and give security.
Do you need two years of financials like the bank did?
Not necessarily. The decision rests mainly on the property, the equity and the exit. We do need enough information to see that the exit, usually a new bank, is realistic within the term.
Is a private loan more expensive than our bank facility?
Yes, generally, which is why it is used as an interim step rather than a permanent home. Pricing is set per deal on the security, loan-to-value ratio, term and exit. Set the cost of a few months' private funding against the cost of a forced sale or an enforcement process.
How early should we start?
The day the non-renewal letter arrives. A private refinance can be quick, but the exit bank will take weeks, and the documents both lenders want overlap. Starting early gives you choices.