Quick answer
When a business loan reaches the end of its term and no lender will refinance it, you need a clear plan quickly. Ask the current lender for a short extension, find out exactly why the refinance was declined, and look at private first mortgages, second mortgages or short-term loans to bridge the gap while the underlying issue is fixed. Selling an asset may also be part of the answer.
Key points
- An expiring loan creates a hard deadline
- Ask the current lender about an extension first
- Private lenders can bridge while the issue that blocked the refinance is fixed
- Always plan the next exit, not just the next loan
- Common situations
- Term ending, interest-only ending, private loan due
- First step
- Ask the current lender for time
- Bridging options
- Private first mortgage, caveat loan
A decline with a deadline
Most declines leave you where you were. A refinance decline doesn’t, because the existing loan has an end date. Whether it’s a five-year commercial loan reaching maturity, an interest-only period finishing, or a short-term private loan falling due, the clock is running.
The good news is that this is one of the most common situations alternative lenders deal with. The key is starting early and being honest about why the refinance was declined.
Why refinances get declined
- Serviceability has weakened since the original loan, perhaps after a tough couple of years.
- Tax debt or credit listings have appeared.
- The property’s value or acceptability has changed.
- The lender has changed its policy for your industry or property type.
- Financials aren’t up to date, so the new lender can’t assess.
- The loan was always intended to be short term and the planned exit didn’t happen.
Our page on getting the real reason can help if the refinancing lender’s explanation was vague.
Step one: ask your current lender for time
Before anything else, contact the current lender. Ask:
- Can the loan be extended for a short period?
- What would an extension cost, in dollars?
- What do you need to see to agree to one?
Lenders generally prefer being repaid by refinance over enforcement. An extension, even a few months, can turn an emergency into a plan. Show them you’re working actively on the solution.
Step two: choose the right bridge
| Situation | Possible bridge |
|---|---|
| Bank won’t refinance; you have solid equity | Private first mortgage refinancing the bank |
| Existing loan is fine but you need extra to clear arrears or debts | Private second mortgage behind it |
| You expect a sale or payment within months | Caveat loan or short-term private loan |
| You’re in a private loan that’s due | Extension, or refinance to another private lender with a stronger exit |
Property-secured business loans range from $20,000 to $5,000,000. The right term is usually long enough to fix the underlying issue with some margin for delay.
Step three: write the next exit before you sign
The most important lesson from refinance declines is that the next loan needs an exit too. If you refinance a bank loan into a 12-month private loan, what happens in month 12? A good plan names the issue you’ll fix, how long it will take, and what you’ll do if it takes longer. Our guide to building an exit strategy for a private loan walks through how to do that.
Common exits after a private refinance include:
- Lodging overdue returns and returning to a bank once two clean years show.
- Letting a credit listing age and resolving tax debt.
- Selling a property or part of a portfolio.
- Receiving a known payment, such as a contract or settlement.
If your loan is approaching its end date, tell us the date and what’s happened so far.
What to avoid
- Leaving it to the final fortnight. Options narrow quickly.
- Rolling from one short-term loan to another with no plan. Costs can build up.
- Ignoring default notices. They escalate if unanswered.
- Agreeing to an extension without checking the cost. Ask for every fee in dollars.
Illustrative example: A medical clinic’s commercial loan reached its five-year expiry. The bank declined to refinance because the clinic’s most recent return reflected a partner leaving. The bank allowed a two-month extension. A private lender refinanced the loan for 18 months, giving the clinic time to lodge a full year’s figures with the new partner in place before returning to a bank.
A timeline to work back from
The best time to start a refinance is well before the expiry date. Working backwards from the date your loan ends helps you see how much room you really have.
| Time before expiry | What to be doing |
|---|---|
| Six months | Review your position; lodge any overdue returns; check credit reports |
| Four months | Approach your current lender about renewal; get feedback early |
| Three months | If renewal looks unlikely, start talking to alternative lenders |
| Two months | Have a preferred replacement and documents ready |
| One month | Loan documents signed; settlement booked |
| Final weeks | Only for confirming details, not starting from scratch |
If you’re already inside the last few weeks, don’t panic. Ask for an extension, prioritise the essentials and focus on one well-matched lender.
What the refinancing lender needs from your current lender
A new lender refinancing your existing loan will usually need a payout figure from your current lender: the exact amount needed to discharge the loan on a particular date, including any fees. Request it early, because some lenders take time to provide it. If there are arrears or default fees, ask for an itemised figure so you understand what’s included and can raise anything that looks wrong.
Get your plan in place early
A refinance decline is serious, but it’s rarely the end of the road. There’s no credit check when you send us an enquiry, and we won’t send your file to a crowd of lenders. A real person reads your situation and calls you, mindful of your deadline. Please include the expiry date, the balance and the property details on the form so we can work quickly. Start your enquiry.
Frequently asked questions
What happens if my business loan expires and I can't refinance?
The lender can require repayment under the loan terms, and if it isn't repaid, may eventually take enforcement action against the security. Most lenders prefer a workable plan, so talk to them before the expiry date.
Can a private lender refinance a bank loan?
Yes. Private lenders commonly refinance expiring bank loans, usually for a shorter term while the borrower fixes whatever stopped the bank from renewing.
Is it risky to refinance into a short-term private loan?
It can be if there's no clear plan for the end of the new loan. A private refinance should come with a realistic exit, such as a return to bank lending, a property sale or a known payment.
What if I'm already in a private loan that's due?
The same principles apply. Ask the current lender about an extension, understand the cost of extending versus refinancing, and have a credible plan for the next step.