Declined by your own bank: why it happens and where to turn

It isn’t personal, even when it feels that way

You’ve banked there for ten years. Your loan repayments have never been late. The branch knows you by name. And still the answer came back no.

That’s one of the most common stories we hear, and one of the most painful. The explanation is simple, though not comforting: at most banks, the person who knows you doesn’t make the lending decision. A central credit team does, guided by policy and often by automated scoring. Your relationship gets you a hearing. It doesn’t get you an exception.

What usually trips a bank application

• Serviceability on old figures. Banks typically rely on your last one or two lodged returns. If those don’t show enough profit, the maths fails even if this year is better.
• Any overdue tax debt. Many banks won’t lend while there’s an unresolved ATO debt.
• Credit listings for the business or any director, including old ones.
• Trading history under about two years.
• Industry limits that have tightened since you last borrowed.
• Security rules that exclude your property type, location or a second-ranking position.
• Recent changes, such as a new structure, a dip in turnover or a big customer lost.

Our page on getting the real reason explains how to find out which of these applied to you.

How alternative lenders differ from your bank

	Your bank	Alternative lenders
Who decides	Central credit team, scoring	Often a credit manager reading the whole file
Main evidence	Tax returns, credit file	Varies: statements, equity, invoices, sales
Policy	Standardised, conservative	Set by each lender, often broader
Speed	Can be slow	Often quicker, depending on the route
Cost	Generally lower	Generally higher, reflecting flexibility
Security	Strict rules	Wider range, including second mortgages

Alternative lenders aren’t a lesser option; they’re a different one. You pay more for flexibility, and in return a lender is willing to look at the parts of your story your bank’s policy couldn’t.

Common routes after a bank decline

• Private second mortgage: borrow against equity behind your existing bank home loan, without refinancing it.
• Bank statement loan: unsecured funding typically from $5,000 to $500,000, sized on recent turnover rather than old returns.
• Private first mortgage: refinance or borrow against property you own, from $20,000 to $5,000,000.
• Invoice or equipment finance: funding tied to receivables or assets rather than your overall profit.

If your bank has also declined to renew an existing facility, see our page on when an overdraft or facility isn’t renewed.

Want to know which of these suits you? Tell us what your bank said.

Should you stay with your bank?

Usually, yes, for everyday banking. Moving your transaction accounts won’t change the decision and may make things harder if you later want to refinance back. Many businesses keep their bank for transactions and use an alternative lender for a specific purpose, then refinance to the bank once the issue that caused the decline has cleared.

If an alternative lender takes security over a property your bank already has a mortgage on, check your existing loan terms. Some require notice or consent for a second-ranking security.

Illustrative example: An optometry practice had banked with the same lender for fourteen years. When the owners asked for funds to buy new equipment, the bank declined because the latest return reflected a year disrupted by renovations. A bank statement lender assessed twelve months of current trading and approved a facility; the practice kept its everyday banking unchanged.

What to ask your relationship manager

If you have a relationship manager, they can be a valuable source of information even if they couldn’t change the decision. Ask them:

• What was the main reason credit gave?
• Was it a policy rule or an assessment of our numbers?
• Is there a lower amount or a different structure the bank would consider?
• What would need to change for the bank to look at it again?
• Would the bank consent to a second-ranking security over property it already holds?

That last question matters. If the bank already has a mortgage over your home or premises, an alternative lender may want to take a second mortgage behind it. Knowing whether your bank will cooperate saves time later.

When going back to your bank later makes sense

Situation now	When to revisit your bank
Declined on old tax returns	Once a stronger return is lodged
Declined because of tax debt	Once the debt is cleared and statements are clean
Declined because of a credit listing	Once it’s paid and has aged, or dropped off
Declined for short trading	Once you reach the bank’s minimum history
Declined under an industry restriction	When the bank’s policy changes

Many businesses use an alternative lender as a bridge and plan from the outset to refinance back to their bank. Building that plan into your exit strategy from day one makes the eventual refinance much smoother.

What to do next

Your bank’s answer reflects its rules. Other lenders have different ones. Sending us an enquiry takes about a minute and doesn’t involve a credit check. We don’t spread your details around, and a real person reads what you send and calls you. Please tell us what your bank said and what you own, because those two details point us to the right lender quickly. See what’s still possible.