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A bank says no for its own reasons. It lends depositors’ money under prudential rules, to fixed credit policies, and it has little room for a file that does not fit. That is different from saying the business is not worth lending to.
Common reasons, and how a private lender sees them
| Bank’s reason | Private lender’s view |
|---|---|
| Financials not up to date | Low-doc options use BAS, bank statements or an accountant’s letter |
| Servicing does not meet the formula | Assessed on the exit and, often, prepaid or capitalised interest |
| ATO debt outstanding | Commonly the purpose of the loan, paid out at settlement |
| Defaults or a low credit score | Considered, with an explanation. Security matters more |
| Business under two years old | Acceptable where the security is sound |
| Property type or location | Wider appetite for land, rural, specialised and regional assets |
| Too slow for the deadline | Settlement in days, not weeks |
What private lenders will not fix
- No equity. The lending is secured against property. Without usable equity there is nothing to lend against.
- No exit. If there is no realistic way to repay at the end of the term, a responsible lender will decline as well.
- A business that is not viable. New debt secured on property moves the loss onto the property. Get advice from your accountant before borrowing to prop up a failing operation.
- Personal purposes. This lending is for companies, trusts and business purposes only.
What to do next
- Ask the bank for the specific reason. It is often one item.
- Work out how much you need, for how long, and how it will be repaid.
- List the property available as security, with values and existing debts.
- Decide whether the existing bank loan stays in place. A second mortgage sits behind it and leaves it untouched. See can you lend behind a bank.
- Plan the return to bank finance. Twelve months of clean financials, a paid-out ATO debt and a repaired credit file are common routes back.
The cost
Private money costs more than bank money. Second mortgages on this site start from 0.975% a month and low-doc business loans from 11% p.a., plus establishment fees. The question is what the funding makes possible, or prevents, over the period it is used. For a short, defined need with a clear exit, the cost is usually small next to the alternative.
We match you with a funder and email you their introduction. Reply to it and they’ll be in touch.
Get matched with a funderFAQ
Does a bank decline affect my credit file?
The enquiry is recorded, not the decline. Several enquiries in a short period can lower a score, so avoid applying to many lenders at once.
Will a private lender ask why the bank said no?
Usually, and a straight answer helps. The reason tells the lender what to check and whether the exit is realistic.
Is private finance a long-term solution?
Rarely. It is a bridge of months, not years, to a sale, a refinance or a stronger set of financials.