Quick answer
An exit strategy is your plan for repaying a private or short-term business loan at the end of its term. Common exits are refinancing to a mainstream lender, selling a property or asset, receiving a known payment, or repaying from trading. A strong exit is specific, realistic, backed by evidence, has a timing buffer and includes a backup plan if the main exit is delayed.
Key points
- Short-term lenders assess the exit as closely as the security
- Four main exits: refinance, sale, known payment, trading
- Evidence turns an intention into a plan
- Always build in a buffer and a backup
Why the exit comes first
With a bank loan repaid monthly over many years, the “exit” is simply the repayments. With many private, caveat and short-term business loans, it’s different. These loans are often designed to bridge a gap, and to be repaid in a lump sum at the end of the term.
That’s why a private lender’s first question is often not “how much do you earn?” but “how will we be repaid?” If you can answer that clearly, with evidence, you’re most of the way to an approval. If you can’t, even strong security may not be enough. Our page on unclear purpose or exit shows how often this causes declines.
The four main exits
| Exit | How it works | Evidence that helps |
|---|---|---|
| Refinance | A bank or longer-term lender repays the private loan | What will change to make you bankable, and when |
| Sale | A property, asset or part of the business is sold | Listing agreement, agent’s appraisal, contract |
| Known payment | A contract, claim or settlement pays out | Contract terms, payment schedule, correspondence |
| Trading | Regular income repays the loan over the term | Statements, forecasts, contracts |
Many plans combine two: a main exit and a backup.
Exit 1: refinance
This is the most common exit after a decline. You take a private loan now, fix whatever stopped the bank, and refinance to cheaper, longer-term finance later.
A credible refinance exit names:
- the issue that currently stops a bank lending (overdue returns, a tax debt, a recent default, a short history),
- the action that will fix it,
- the date it should be fixed by,
- what a bank will then see.
For example: “The bank declined because our 2025 and 2026 returns weren’t lodged. Our accountant will lodge both by March. With two years lodged and the ATO debt cleared by this loan, we expect to apply to the bank in June.”
Ask yourself honestly whether a bank will actually lend once the issue is fixed. If there are other hurdles, include them.
Exit 2: sale
Selling a property or asset is a strong exit when it’s specific and already moving.
- Weak: “We could sell the investment unit if needed.”
- Stronger: “The investment unit is listed with an agent, with an appraisal attached. We expect to sell within four months and the net proceeds will exceed the loan.”
Build in time for marketing, negotiation, settlement and the possibility of a lower price than hoped.
Exit 3: a known payment
Some businesses need short-term funding because a large payment is coming but hasn’t arrived. Examples include a contract milestone, a retention release, an insurance claim or a legal settlement.
The evidence matters: the contract, the payment terms, any certification required before payment, and the payer’s history. Lenders will consider how certain the payment is and what could delay it.
Exit 4: trading income
If the loan is repaid from regular trading over its term, the exit looks more like normal serviceability. Lenders will want statements and a forecast showing the repayments fit. This is more typical of longer-term private loans and cash-flow facilities.
Building the plan
A strong exit plan fits on one page:
- Loan amount and term.
- Main exit, with specific steps and dates.
- Evidence for each step, attached.
- Timing buffer: what happens if it takes two or three months longer.
- Backup exit, with its own evidence.
- Costs: what the loan will cost in dollars, including any extension fees, and why it’s worth it.
Timing buffers
Things take longer than planned. Accountants get busy. Property campaigns run long. Contract payments slip. A loan term that only works if everything happens on time is fragile. Add a sensible buffer, often a few months, and be realistic about the cost of the extra time.
Backup exits
A backup doesn’t need to be your preferred option. It just needs to be real. If the bank refinance falls through, could you sell an asset? If the sale is slow, could you refinance to another private lender for a longer term? Writing it down shows the lender you’ve thought it through.
If you’re working on an exit plan and want a second view, send us a short enquiry.
Matching the loan to the exit
| If your exit is… | Consider |
|---|---|
| A known payment within months | A caveat loan or short private loan |
| A refinance after fixing an issue | A private first mortgage or second mortgage with a term matching the fix |
| A property sale | A private loan with a term that covers the sale campaign and settlement |
| Trading income | A longer-term private loan or cash-flow facility |
Choosing a term that fits the exit avoids paying for time you don’t need, and avoids running out of time you do.
When the exit is at risk
If your main exit starts to slip during the loan, act early:
- Tell your lender as soon as you see a delay.
- Move to your backup before the term ends, not after.
- Ask about extensions and their cost in dollars.
- Avoid rolling into another short-term loan without a new, stronger exit.
Our page on refinance declines covers what to do if the planned refinance itself is refused.
Illustrative example: A café group took a 12-month private first mortgage to clear an ATO debt and refinance an expiring bank loan. The main exit was a bank refinance once two years of returns were lodged, expected by month eight. The backup was the sale of a vacant block the owners held. The returns were lodged in month seven, and the bank refinanced in month ten, inside the buffer.
An exit plan template
Use this structure for your one-page plan. Replace the bracketed text with your details.
Exit plan — [Business name]
Loan: [Amount] over [term], secured by [property]. Purpose: [What the funds are for, with amounts.] Main exit: [Refinance / sale / payment / trading], expected by [date]. Steps: [Step 1, date] · [Step 2, date] · [Step 3, date] Evidence attached: [Accountant’s letter, listing agreement, contract.] Buffer: [How much extra time the term allows.] Backup exit: [What happens if the main exit is delayed, with evidence.] Cost: [Total cost in dollars, and why it’s worthwhile.]
A plan in this format answers the questions a private lender would otherwise ask over several phone calls. It also gives you a checklist to track during the loan.
Stress-testing your exit before you sign
Before committing to a short-term loan, run your exit through a few “what if” questions. If the answer to any of them is “we’d be stuck”, strengthen the plan first.
| What if… | What you’d need |
|---|---|
| The refinance takes three months longer? | A term with that buffer built in, or an agreed extension option |
| The property sells for less than hoped? | Enough equity that a lower price still repays the loan |
| The contract payment is delayed? | A second source of repayment, or a longer term |
| Trading dips during the loan? | Repayments that fit even a slower month |
| The bank’s policy changes? | An alternative lender in mind for the refinance |
A plan that survives these questions is one a private lender can rely on. It’s also one you can rely on, which matters just as much.
Plan the way out before the way in
A clear exit makes short-term finance safer for you and easier for a lender to approve. Our enquiry takes about a minute and involves no credit check at that stage. Your details stay with us rather than being sent out to a list of lenders, and a real person reads your situation and calls you. Please tell us how you expect to repay the loan, even if the plan is still rough, so we can help you shape it. See what’s possible.
Frequently asked questions
Why do private lenders care so much about the exit?
Because many private and caveat loans are designed to be repaid in a lump sum at the end of a short term. If the exit fails, the lender may have to rely on the security, which is slow and costly for everyone.
What's the most common exit?
Refinancing to a bank or longer-term lender once the issue that caused the original decline has been resolved, such as lodging returns or clearing a tax debt.
What if my exit is delayed?
Talk to your lender early. Some will extend for a fee; others may need you to refinance elsewhere. A backup exit in your original plan makes these conversations easier.
How long should the loan term be?
Long enough for your exit to happen comfortably, with a buffer for delays, but no longer than necessary given the cost of short-term finance.