Declined by the bank: what to do next

The email or phone call is usually brief. The bank has “decided not to proceed”, thanks you for your interest, and that’s it. If you’d already told a supplier, a landlord or a vendor that the money was coming, the knot in your stomach is completely normal.

A fair starting point: banks are very good lenders. They’re usually the cheapest money a business can get, and their criteria exist because they lend at those prices. A bank saying no often means your application didn’t fit one particular set of boxes. It rarely means the business can’t be funded. This page is the plan for the next few weeks.

The first 48 hours: four things worth doing

1. Ask for the reason, in writing. Under the Banking Code of Practice, a subscribing bank that declines a small business loan commits to telling you the general reason why, where appropriate. “General” is the operative word; you won’t get the scorecard. You will usually get enough to sort the decline into one of the buckets below. business.gov.au gives the same advice: ask the lender for feedback and use it before you reapply.

2. Get your credit reports. The OAIC confirms that a refusal opens a 90-day window in which every bureau has to hand over your report at no charge. Request yours from Equifax and Experian (Experian has absorbed illion’s consumer data), and ask for the company’s commercial file too if you trade through a Pty Ltd. You’re looking for anything you didn’t know was there: an old default, an enquiry you don’t recognise, a director listing from a past business.

3. Don’t fire off three more applications. It’s tempting to try everyone at once. Each application leaves a credit enquiry on your file, and a run of them inside a fortnight signals rejection to whoever looks next. See business loans with too many credit enquiries for the way underwriters interpret a crowded file.

4. Tell anyone waiting on the money. A supplier or vendor told early, with a revised date, is usually patient. One told on the due date usually isn’t.

Policy decline or credit decline? Read the reason properly

Nearly every bank decline falls into one of two families, and they need opposite responses.

The bank said something like	Family	What it means	Best next move
“Outside our appetite for this industry”	Policy	The bank has limits on certain sectors	A lender that funds your industry; reapplying to the same bank won’t help
“Business hasn’t traded long enough”	Policy	Most banks want two years of financials	Non-bank or startup lenders, or wait
“Security doesn’t meet our requirements”	Policy	Wrong kind of security, or not enough	See bank wants more security than you have
“Loan amount exceeds what we can offer”	Policy or credit	Size limit, or serviceability	Consider a partial offer plus a top-up elsewhere
“Unable to demonstrate capacity to repay”	Credit	Profit doesn’t cover repayments on their test	Lower amount, longer term, or lenders who assess on bank statements
“Account conduct”	Credit	Dishonours, overdrawn days, missed repayments	Clean statements for a few months, or a specialist lender
“Credit history”	Credit	Defaults, judgments, recent arrears	See bad credit business loans
Nothing useful at all	Unknown	Could be anything, including internal flags	See bank said no for no clear reason

The table matters because owners often fix the wrong thing. If the bank’s industry policy excludes you, a perfect set of financials won’t change its answer. If the issue was serviceability, switching lenders without changing the amount or term just collects another decline.

Where to go next, in a sensible order

1. The same bank, with a different shape. If the reason was size or serviceability, ask whether a smaller amount, a longer term or added security would work. Sometimes the bank will say yes to something close to what you need.
2. A different bank. Banks don’t all draw their lines in the same place. A challenger bank such as Judo Bank concentrates on business lending and may assess differently from a major. Worth trying when the decline was about policy, not conduct.
3. A non-bank lender. Broader criteria, faster decisions, higher total cost. Many assess on recent bank statements rather than last year’s tax return.
4. A property-secured lender. If you own property, second mortgage and caveat lenders lean on equity and your plan to repay, and they look past many of the reasons banks decline.
5. Asset-specific finance. If the money is for equipment or vehicles, equipment finance uses the asset as security and is often approved where a general business loan wasn’t.

The business loan finder can narrow this down in a couple of minutes. If you’d rather a person did it, tell us what the bank said and we’ll suggest where to go.

An example of a decline turned around

Illustrative only. A physiotherapy practice applies to its major bank for $320k to fit out a second clinic. The bank declines, saying the request exceeds what the practice can service from current profit, because the new clinic has no history.

The owner asks for the reason in writing and gets it. The credit reports are clean. The decline is about serviceability, not credit.

The fix comes in two parts. The fit-out equipment, about $140k, goes through equipment finance secured by the equipment itself. The bank is then asked to reconsider a smaller $180k loan for the building works, which it approves because the repayments now fit its test. The total cost is a little higher than one bank loan would have been, but far lower than putting the whole amount with a short-term lender.

When to come back to the bank

Using a non-bank lender doesn’t mean leaving banks for good. Many owners treat it as a bridge. After 12 to 24 months of on-time repayments, lodged financials and tidy statements, the bank’s answer often changes. Note in your diary when you’ll be ready to ask, and keep the evidence that things improved. Our comparison of banks and non-bank lenders covers how to plan that refinance.

The bank said no. Here’s where we come in

This is the moment most of our enquiries come from: a good business, a real need and a bank decline still fresh. Working out why it happened and who will say yes is the part we’re good at.

The enquiry is short, around a minute, and it doesn’t trigger a credit check, which matters when your file has just taken an enquiry from the bank. We don’t scatter your application across dozens of lenders. A specialist reads it, then calls you for a proper conversation about what the bank told you. Fill in the form carefully and include the reason the bank gave, because that one line often tells us exactly which lender to try first.

Show us what the bank declined →