Quick answer
When a bank declines a business loan without explaining, the cause is usually something it can see that you can't: comprehensive credit reporting data, account conduct, exposure through another company or a guarantor, or an internal industry limit. Ask in writing for the general reason, which the Banking Code says a bank should give where appropriate. Check every credit file, then approach a lender whose criteria you can confirm before applying.
Key points
- A vague decline usually hides something specific, often in data the bank holds and you haven't looked at
- Comprehensive credit reporting shows lenders up to two years of monthly repayment history, not just defaults
- Your own transaction account data is often the strongest factor in a bank's decision
- Some declines can't be explained, for example where anti-money laundering rules restrict what a bank can say
- A complaint can fix poor treatment, but neither the bank nor AFCA will usually be forced to lend
“Doesn’t meet our current lending criteria.” Seven words, no detail, and you’re left guessing. You’ve banked with them for years, the business is profitable, your credit score looks fine, and still the answer is no. It feels arbitrary.
It almost never is. Banks make lending decisions from a long list of data points, some of which you’ve never seen. When the reason isn’t stated, it’s usually because the cause sits in one of those places, or because the bank’s policy limits what it can say. The task is to work out which, so your next application goes somewhere it can succeed.
How do you ask so you actually get an answer?
The industry’s Banking Code of Practice includes a promise that member banks will, where appropriate, give a declined small business the broad reason. A short written request to your relationship manager, or the bank’s business lending team, is the way to use that commitment. Keep it polite and specific:
- the application date and amount;
- that you’re asking for the general reason under the Banking Code of Practice;
- whether the decline related to credit policy, serviceability, security, credit history or something else;
- what, if anything, would allow the bank to reconsider.
That last question often produces the most useful reply. A banker who can’t share the scorecard can frequently say “come back with two years of financials” or “we’d need more security”, which tells you everything.
The places a hidden reason usually lives
If the reply is still vague, work through these in order. Each comes with a clue you can check yourself.
Your monthly repayment history. Under comprehensive credit reporting, lenders can see up to two years of on-time or late repayments on personal credit accounts such as a home loan, car loan or credit card. A string of payments that were 14 or 30 days late can tell against you even with no default listed. Clue: request your reports and look at the repayment history section, not just the score. Read more about comprehensive credit reporting.
Your own bank account behaviour. Your bank holds every transaction you’ve made with it. Dishonoured payments, regular overdrawn days, gambling transactions on a business account or large unexplained transfers all feed its view. Clue: print six months of statements and read them as a stranger would. Our page on dishonours on your bank statements shows how lenders weigh them.
Another company or another person. If you’re a director of other companies, the bank may look at their debts and conduct too. A co-borrower or guarantor’s credit history and existing loans are part of the assessment as well. For privacy reasons a bank often won’t say “it was your partner’s file”. Clue: ask everyone involved to check their own reports.
A tax debt you thought was private. The ATO can disclose business tax debts of $100k or more, overdue for over 90 days, to credit bureaus when the business has stopped working with the ATO on it. It shows on the commercial file, which owners rarely check. Clue: order the business’s commercial credit report, not just your personal one.
An internal limit you can’t see. Banks cap how much they’ll lend to particular industries, regions or security types. If your sector is at its limit this quarter, the answer can be no for reasons unrelated to your business. Clue: a different bank, or a challenger bank, says yes to the same application.
A compliance flag. Occasionally a bank can’t explain because anti-money laundering law restricts what it can disclose. That’s rare, and there’s not much to be gained by pressing the point. Move on to a different lender.
Checking your credit files properly
Being refused credit gives you 90 days to ask each credit reporting body for a free copy of your report, under the rules the OAIC sets out. You can also get one free every three months regardless. Do it now:
- Personal reports from Equifax and Experian. Experian now holds the former illion consumer data, so older guides listing three separate bureaus are out of date.
- Commercial reports for any company you’re a director of, which can show trade defaults, court actions and ATO disclosures.
- Reports for any co-director or guarantor who was part of the application.
If you find an error, the creditor or bureau can correct it free of charge. Fixing a wrong listing before your next application is time well spent.
Found something and not sure how serious it is? Run it past us without a credit check; a specialist can tell you which lenders tolerate it.
What to do next, depending on what you find
| What you found | What it suggests | Next step |
|---|---|---|
| Late repayments on personal credit | The bank’s scorecard dropped below its line | Three to six months of clean payments, or a lender that weighs business performance more |
| Messy account conduct | Serviceability or behaviour concern | Tidy the account; meanwhile, consider non-bank lenders |
| A partner’s or guarantor’s issue | The weakest party set the outcome | Restructure who borrows or guarantees, or offer other security |
| A business tax debt disclosure | ATO debt now visible to lenders | See ATO tax debt business loans |
| Nothing at all | Probably an internal limit or policy | Try a different bank or a fintech lender |
Can you complain, and should you?
You can. Every bank has an internal complaints process, and the Australian Financial Complaints Authority can review small business lending complaints after that. AFCA’s approach to lending to small business focuses on fair treatment, due care and whether the bank misled you. It doesn’t create a right to a loan, and it generally won’t substitute its own credit judgement for the bank’s.
A complaint makes sense if you were given wrong information, the bank lost your documents, or you were told the loan was approved and then it wasn’t. If the bank simply weighed the risk differently than you would have, your energy is better spent on the next lender.
Whatever you decide, banks remain an excellent source of funding, and the bank that declined you today may approve you in a year. Keep the relationship civil.
No reason given? Let a person look at it properly
A decline with no explanation is frustrating precisely because an invisible problem can’t be fixed. Our team reads applications like yours every day, and a fresh pair of eyes often spots the likely cause in a few minutes.
Allow a minute for the enquiry; your credit report isn’t checked at that stage, so there’s no new mark on your file. We keep your enquiry in-house instead of firing it off to a list of funders, and the specialist who reviews it rings you personally. Tell us everything the bank did say, even if it seems unhelpful, and anything you found on your credit reports, because the clues are usually in the details.
Frequently asked questions
Is a bank allowed to decline without giving a reason?
A bank can decline for any lawful commercial reason. Member banks of the Banking Code of Practice have promised to share the broad reason with a declined small business where appropriate, so asking in writing is fair. The detail and the internal score usually stay confidential.
Why would a bank decline when my credit score is good?
A score is only one input. The bank also looks at your account conduct, the business's profit against the repayments, the industry, the security, other debts in related companies and any guarantor's position. Any of those can produce a no while your score looks healthy.
What is comprehensive credit reporting and why does it matter?
It's the system where lenders share positive and negative data, including whether each monthly repayment on a personal credit account was made on time. A run of late repayments on a car loan or credit card can count against you even though no default was ever listed.
Could the decline be about my business partner or guarantor?
Yes. If a co-director, partner or guarantor has a poor credit history, existing debts or a past insolvency, the bank's assessment includes them. Banks often won't spell out that the problem was another person, for privacy reasons.
Should I lodge a complaint?
Only if you believe you were treated unfairly, misled or given wrong information. Start with the bank's internal complaints team. If it isn't resolved, AFCA can review how the bank dealt with you, though it generally won't overrule a fair credit judgement.