Keeping a lender on side once the money has landed

The day your loan settles is the day your lender stops being someone you impress and becomes someone you work with. Most of what happens next is quiet: payments go out, statements get filed, nobody calls. The few moments that aren’t quiet decide how the relationship feels for years.

Banks are often the cheapest and most flexible lenders for a business that fits their criteria, and a good one will give you room when you’ve earned it. Non-bank lenders, which fund many businesses banks decline, behave much the same way. This guide is about earning that room.

If you’re still before the signing stage, how to build a relationship with your bank covers the groundwork. Here we’re looking at the loan term itself.

What does a lender watch after settlement?

Less than you might fear, and more than you might notice. Most lenders look at four things:

• Whether repayments arrive on time. The most basic signal, and the one every system tracks automatically.
• Whether reports arrive on time. Annual financials, management accounts, BAS copies, valuations or debtor lists, depending on the facility.
• The account behaviour. For bank customers, overdraft use, dishonours, and whether your turnover still runs through the account that justified the loan.
• Outside signals. ATO debt, judgments, a drop in your credit score, or news of a dispute with a major customer.

A lender doesn’t need to be suspicious to notice these. Software notices them for it. The skill is knowing what the lender will see before it sees it, and speaking first.

Which obligations should go in your calendar on day one?

Open the contract, as covered in how to read the fine print on a business loan, and list every date and test. A simple register works.

Obligation	Typical timing	Who owns it
Repayment	Weekly, fortnightly or monthly	You (and your bookkeeper)
Annual financial statements	Within a set number of months of year end	Your accountant
Management accounts or BAS copy	Quarterly or on request	Bookkeeper
Insurance renewal certificate	Before the policy expires	You
Financial covenant test	Quarterly or half-yearly	Accountant
Facility review or annual review	Usually on the anniversary	You and the lender

Two habits make this stick. First, give the register to your accountant and ask them to flag dates. Second, send reports a few days early with a short covering note. A lender that gets a clean document before the deadline starts to assume your business is organised.

A loan covenant is the one that trips up good businesses: you can pay every instalment and still breach a ratio because stock or debtors grew faster than profit. Check covenant headroom a month before each test, not the day the accountant finishes the accounts.

When should you call, and what should you say?

Call when you can see a problem and before it becomes a missed payment. The common triggers:

• A major customer is paying 30 days late and you can see the cash gap on your forecast.
• A tax bill, a payroll run or a stock commitment will land in the same fortnight as a repayment.
• You expect to breach a covenant at the next test.
• Your accountant is running behind and a reporting date is at risk.
• You’re about to make a big move: a second site, a new borrowing, a change of ownership.

Keep the call short and structured:

1. What happened, in two sentences, without drama.
2. How long it lasts. A date, not “a while”.
3. What you’ve already done: chased the debtor, cut spend, drawn on savings.
4. What you’re asking for: a one-month deferral, a waiver for the covenant test, extra time for the report.
5. What you’ll send and by when.

Then put it in an email the same day. A written record protects both sides and gives the banker something to take to credit.

Our deeper guides on asking a lender for hardship help and what to do if you can’t make a loan repayment go further if the problem has already arrived.

Why do lenders respond better to early bad news?

A lender’s worst outcome is a loan it learns about too late to fix. It has choices when it knows early: restructure the repayments, waive a technical breach, extend the term, take extra security, or simply wait a few weeks. Each costs less than a default process.

There’s also a human point. The person on the other end of the phone has to justify any flexibility to their own credit team. A borrower who rang early, explained clearly and backed it up with a forecast gives them something to write. A borrower who goes quiet gives them nothing.

If you’re short of numbers, a 13-week cash flow forecast is the single most persuasive document you can bring.

What does keeping a lender on side look like in practice?

Here is an illustrative case. A landscaping business has a $120k equipment and working capital facility with its bank. In February a council contract is delayed, and the owner can see that March’s receipts will land two weeks late.

On 10 February the owner rings the business banker and says: the council has moved its payment run, I expect $38k to arrive about 24 March, I’d like the 28 February repayment moved to 28 March, and I’ll send a four-week forecast today. The banker agrees to a one-off deferral, noted on file.

Compare the alternative: the repayment bounces on 28 February, a dishonour fee applies, an automated letter goes out, and the owner is calling on the back foot. Same underlying problem, very different position. Exact terms vary by lender, but the shape of the two paths is consistent.

Should you do anything differently with a non-bank lender?

Mostly the same, with two adjustments. Non-bank and private lenders often have shorter terms, so the review points arrive sooner. And many use daily or weekly direct debits, so a cash gap shows up faster. Ask at the start whether you can contact an individual, how they handle a late payment, and whether a short deferral is possible. Our guide to daily, weekly and monthly repayments explains why frequency matters.

What if the relationship has already soured?

It happens, sometimes through no fault of either side. A new account manager takes a different view, a policy changes, or a breach has been noted.

• Get the position in writing. What does the lender say you have breached, and what does it want?
• Ask for a meeting with someone who can decide, not only the person who sent the letter.
• Make a proposal. A repayment plan, extra security, a sale of an asset, a refinance deadline.
• Use the formal channels if needed. The lender’s internal complaints team first, then AFCA for eligible small business disputes. See how to complain about a lender and what happens if your business loan defaults.
• Consider moving. If trust has gone and the numbers work, refinancing is a legitimate answer, not a betrayal.

ASBFEO also offers dispute support for small businesses, which is worth knowing about before things reach a formal stage.

Where do we come in?

If your lender relationship is strained, or you need a second facility to ease the pressure on the first, the enquiry form is a low-stakes place to start. It takes about a minute, and nothing in it triggers a credit check, so your file stays untouched while you explore.

We don’t hand your details to a stack of lenders. A real person on our team reads your answers and calls you to talk through what’s possible, which works best when the amounts, dates and security you give us are accurate.

Start with a quick enquiry →