Declined because of the industry you're in

What is an industry decline, really?

Lenders don’t only assess individual borrowers. They also manage a portfolio. If a particular sector has produced more arrears or losses for them, they may decide to limit their exposure to it. That can mean lower maximum loan amounts, extra documentation, tougher security requirements, or a flat refusal.

When that happens, a strong business can be declined simply because of the box it sits in. It feels personal, but it isn’t. It’s a lender saying it has enough of your industry on its books already.

Which industries tend to face restrictions?

There’s no universal list, and policies change. In recent years, sectors that commonly attract extra scrutiny include:

• Building and construction, particularly residential builders and trades dependent on progress payments.
• Hospitality, including cafés, restaurants and bars with thin margins.
• Transport and freight, especially owner-drivers with concentrated customers.
• Labour hire and recruitment, given payroll and compliance risks.
• Gaming, adult and some cash-intensive businesses, often excluded on reputational grounds.
• New or highly seasonal agriculture, depending on the lender’s expertise.

ASIC publishes insolvency statistics by industry, and lenders watch the same trends. Construction and hospitality have featured heavily in insolvency appointments, which partly explains the caution.

How do alternative lenders approach the same industries?

Lender type	How industry affects the decision
Major bank	Portfolio limits and policy exclusions can override your strengths
Non-bank cash-flow lender	Industry matters, but recent bank statements carry more weight
Invoice financier	Focuses on the quality of your customers and invoices
Revenue-based financier	Looks at daily or weekly takings
Private property lender	Mainly the security and repayment plan

A private lender using your property as security is far less concerned with whether you run a café or an accounting practice. A private first mortgage or second mortgage can make the industry question almost irrelevant.

For trades and contractors without property, invoice finance can work well because the lender is really assessing your customer, such as a council or a large head contractor. For cafés and shops with steady card takings, revenue-based finance looks at what you actually sell.

How to stand out from your industry’s averages

1. Show your own numbers. Clean bank statements with steady deposits tell a lender your business isn’t the average.
2. Prove your pipeline. Signed contracts, purchase orders or a booking calendar demonstrate future income.
3. Highlight your experience. Years in the industry reduce perceived risk.
4. Diversify your customers. If one customer makes up most of your income, explain how secure that relationship is.
5. Check your industry code. Make sure your ABN lists the right activity. A misclassified code can put you in a stricter category.

Want a view on which lenders are open to your sector right now? Start a short enquiry.

A note for builders and trades

If you’re in construction, lenders will usually ask about your licence, insurances, your largest contracts, how payments are staged and any retentions held. Have those details ready. Lenders also look carefully at statements for signs of stretched cash flow, such as frequent overdrawn days or late super payments. Our page on bank statement red flags covers what to watch.

Illustrative example: A small restaurant group was declined by its bank because the bank had reduced lending to hospitality. The owners had equity in a commercial property they leased to an unrelated tenant. A private lender used that property as security for a refurbishment loan, paying little attention to the hospitality restriction that had stopped the bank.

Questions to ask a lender about its industry appetite

Before applying, it’s reasonable to ask a lender or adviser directly whether your industry is one they’re comfortable with. Useful questions:

• Do you currently lend to businesses in my industry?
• Are there limits on the amount, term or type of facility for my sector?
• Do you need any industry-specific documents, such as licences or contracts?
• Does your policy look at my ABN’s industry code, or at what the business actually does?
• Have there been recent changes to your policy for my industry?

Asking first can save an unnecessary credit enquiry. A lender that’s closed to your sector will usually say so if asked.

How lenders classify what you do

Source	What it shows
ABN industry code	The main business activity you nominated when registering
Business name and website	How you present the business
Bank statements	Who your customers and suppliers actually are
Licences and registrations	Regulated activities, such as building or transport
Contracts	The type and size of work you take on

If your business has moved into a different activity since you first registered, updating your ABN details can stop you being sorted into the wrong category. The change takes a few minutes through the Australian Business Register.

Quick checklist for an industry decline

• Ask the lender whether the decline was an industry policy rule.
• Check your ABN industry code is accurate.
• Gather contracts, purchase orders or bookings that show demand.
• Prepare clean recent bank statements.
• Note your years of experience in the industry.
• Look for lenders whose policy relies on security, invoices or sales rather than sector.

Your business is more than its industry code

Being in a sector some lenders avoid doesn’t mean every lender will. There’s no credit check when you send us an enquiry, and your details won’t be distributed to a crowd of lenders. A real person reads your story and calls you. Please be specific about your industry and your largest customers on the form, so we can steer you towards a lender that’s comfortable with your sector. Tell us about your business.