Refinancing when the bank says no

A “no” from the bank feels final, but it rarely is. Banks decline business refinances for reasons that are often temporary: financials not yet lodged, a tax debt on the books, a dip in one year’s trading, an industry the credit team has gone cold on, or a facility that has simply reached its end date. None of those change the fact that your property still holds equity.

A private first mortgage is the tool for this moment. It pays the bank out, gives you a defined window, and lets you fix the problem on your own timetable instead of the bank’s.

Why do banks say no to business refinances?

Most declines fall into a handful of patterns. Knowing which one applies tells you what the private term needs to achieve.

Bank’s likely reason	What a private lender weighs instead	What to fix during the term
Servicing: income doesn’t cover repayments on bank tests	Equity, the exit, and interest that can be prepaid or capitalised	Show a full year of improved trading
Financials or BAS not lodged	The property and a credible exit	Get lodgements current
ATO debt or payment plan	Equity and how the debt is cleared	Clear the ATO balance
Credit file issues or defaults	The story behind them and the security	Pay out defaults, rebuild conduct
Facility expiring and not renewed	The property and exit timing	Line up a new bank or a sale
Industry or property type out of favour	The property’s saleability	Find a lender whose policy fits

The common thread: a bank asks whether you fit its policy today. A private secured lender asks whether the property supports the loan and whether the exit is real. Our guide to private lender vs bank unpacks that difference.

What should I ask the bank before I move?

Get the reason. It costs nothing and it shapes everything that follows.

• For new applications: under the Banking Code of Practice that took effect on 28 February 2025, a subscribing bank that declines a small business loan application will tell you the general reason, unless it is reasonable not to. business.gov.au also advises asking the lender for feedback, then working out what to change before you reapply.
• For an expiring facility: if you are a small business customer covered by the Code and not in default, the bank must give notice of a decision not to extend at least three months before you need to repay in full. The Code also notes that if the bank does extend, it is not required to do so on the same terms.

That three-month notice is valuable. It is enough time to arrange a private refinance in an orderly way, instead of scrambling in the final week.

How does a private refinance work when the bank won’t?

The mechanics are straightforward, and they are covered step by step on our refinance a bank first mortgage page. In short:

1. You request a payout figure from the bank.
2. The private lender assesses the property directly, with no formal valuation required.
3. A Letter of Offer sets out the amount, term, fees and how interest is handled.
4. At settlement the bank is paid out, its mortgage is discharged and the new first mortgage is registered.

Because the property is assessed rather than your bank-style servicing, the documentation is lighter. Our low-doc first mortgage page lists what you still need.

Interest can be prepaid or capitalised, so there may be no monthly repayments during the term. That matters when the reason for the decline was cash flow: you are not swapping one strained repayment for another.

What makes a private refinance easier to approve?

A decline from the bank doesn’t weaken your private application. What strengthens it is clarity.

• Be upfront about the reason. Send the bank’s letter or email. A lender that understands the problem can judge whether the plan fixes it.
• Know your payout figure. Include arrears, break costs and any fees the bank will add, so the loan amount is right the first time.
• Show the repair plan. If the issue is lodgements, name the accountant and the date. If it is ATO debt, show the balance and how the loan clears it.
• Name the next lender, or the buyer. Even an early conversation with another bank, or a listing agreement, makes the exit tangible.

These details turn “the bank said no” into “here is how we get back to a bank”, and that is the story a private lender wants to fund.

How long should the private loan run?

Long enough to fix the problem properly, plus a buffer. A private first mortgage runs for 1 to 24 months.

• 12 months suits a quick fix: lodging overdue financials, clearing a modest ATO balance, or completing a sale that is already planned.
• 24 months suits a deeper repair: a year of stronger trading to show a new bank, or a property sale in a slower market.

Choosing the term is covered in detail on short-term first mortgages.

What does a bank-to-private-to-bank refinance look like?

Illustrative example: a Geelong metal fabrication company has a $900k bank facility secured on its factory, worth around $2m. The facility is due to expire and the bank gives notice that it will not extend, after a loss-making year and an ATO payment plan. With three months’ warning, the directors arrange a $1m private first mortgage for 18 months. It pays out the bank, clears the remaining ATO balance and covers costs, with interest capitalised. Over the next year the company returns to profit, lodges clean financials and refinances to a different bank, repaying the private loan in full.

The factory never left the family’s hands, and the second bank lent on a file that no longer had a problem in it.

If your bank has already said no, share your situation with a specialist and get a clear read on the options.

Key terms

• Decline: a bank’s refusal of a new application or variation.
• Non-extension: a bank’s decision not to roll over a facility at the end of its term.
• Payout figure: the amount the bank needs to discharge its mortgage on a set date.
• Letter of Offer: the private lender’s written offer setting out the loan’s terms and fees.
• Exit: the refinance or sale that repays the private loan.

Bank said no? See if you qualify here

An enquiry does not involve a credit check when you first make it. It goes to a real specialist who reads the whole story, including what the bank said, and your details are not shared around a crowd of lenders. Our lending partner fundU is a direct lender, so the people assessing your property are the people funding it.

Tell us the property, the bank balance, the reason for the decline and how you plan to get back to a bank. Precise answers about the property and what is owing get you the right answer first time. Find out where you stand.