A bank's no isn't the final answer.
Written for: Business owners, property investors and developers
A bank decline is frustrating, especially when the deal makes sense to you. But a no from a bank usually says more about the bank's rules than about your deal.
Banks lend inside tight policy. If a scenario falls outside it, the answer is often no, even when the security is strong and the plan is sound. Private and non-bank lenders work differently, and many deals banks turn away are exactly the kind they fund.
The reasons usually fall into a few groups.
The policy doesn't fit. Loan size, property type, location, industry or loan purpose can all sit outside a bank's appetite.
The financials don't tell the full story. Recent losses, a new business, irregular income or tax returns that aren't up to date can stop a bank application, even when the business is sound.
Credit issues. ATO debt, arrears or a past default often end the conversation at a bank.
Timing. Bank approvals can take weeks. When a settlement date is fixed, that alone can rule a bank out.
The structure is complex. Trusts, several entities, development sites and deals that need more than one source of funding often don't fit a standard bank process.
Private lenders fund loans from private and institutional capital rather than customer deposits, and non-bank lenders sit between the two. Both assess the deal on its merits, with more focus on:
That flexibility comes at a cost. Private loans are usually priced above bank rates, and non-bank rates often sit in between. For many borrowers it's worth it when the alternative is a missed opportunity or a failed settlement.
Find out why. Ask the bank for the reason. It tells the next lender what to look at first.
Don't send it everywhere. Sending the same deal to several lenders at once can make it harder to fund. Lenders notice when a deal has been shopped around.
Be upfront about the issues. Arrears, ATO debt or a short trading history are far easier to work through when they're raised at the start.
Have a clear exit. For short-term loans especially, a supported plan for repayment is one of the biggest factors in how a lender views the deal. If timing is the issue, bridging finance may help.
We work with more than 70 private and non-bank lenders and stay across what they're funding right now, so your scenario goes to the lenders it suits, in the right order. Where a bank is the better fit, it goes through our trusted broker network.
We aim to be in touch within the hour. Once we have what we need, you'll usually know within 24 hours whether there's a credible funding pathway, and if there isn't, why. You can also see what our lenders are funding right now.
We work on commercial and business-purpose loans only. If you need a home loan, personal loan or any other consumer loan, we'll put you in touch with one of our trusted brokers.
This article is general information only. It isn't financial, credit or legal advice and doesn't take into account anyone's particular circumstances. Lending decisions are made by the lender.
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