Bank Declined Your Commercial Property Refinance? What to Do Next
A bank decline does not explain whether the problem is timing, policy, serviceability, valuation, documentation or the transaction itself. Before seeking replacement finance, identify the actual barrier and build a structure that addresses it.
Commercial and business-purpose finance only. Finance is subject to assessment, valuation, lender criteria, documentation, acceptable security and a credible exit. Obtain independent legal, tax, accounting, insolvency and valuation advice.
The first decision is not simply which lender to try next. The borrower needs to understand why the bank declined, how much time remains on the current facility, the full payout, what evidence can be improved and whether short-term private finance creates a realistic path to a sustainable exit.
Why was the commercial refinance declined?
Serviceability
Historical income, forecast cash flow, lease income or debt coverage did not meet the bank’s requirements.
Property or valuation
The accepted value, property type, location, vacancy, lease profile, condition or alternate marketability was outside policy.
Borrower and conduct
Arrears, credit events, tax debt, entity complexity, incomplete reporting or existing lender conduct affected the decision.
Timing or documentation
The application could not satisfy conditions, valuation, approvals or legal work before the current loan maturity.
Business.gov.au recommends asking the lender for feedback after an unsuccessful business-loan application. Obtain the decline reasons in usable terms: what specific policy, evidence, ratio, property issue or condition was not met?
What should the borrower do immediately?
- confirm the existing loan maturity and all notice deadlines;
- request a current written payout and transaction history;
- ask the bank or broker for specific decline feedback;
- obtain copies of the bank valuation or key valuation findings where available;
- list every outstanding condition and missing document;
- update business financials and cash-flow forecasts;
- identify all property securities, mortgages and caveats;
- seek legal advice about the current facility and any notices; and
- prepare primary and fallback repayment exits.
If the company may be unable to pay debts as they fall due, directors should obtain qualified insolvency and legal advice promptly. New debt should not be used to postpone a solvency assessment.
How can private commercial finance differ from a bank refinance?
Property focus
The lender may place greater weight on acceptable real-property security, current value and marketability.
Scenario assessment
The reason for the decline, borrower experience, transaction risks and proposed solution can be reviewed case by case.
Shorter-term structure
The facility may be designed to reach a defined sale, refinance, completion or business milestone rather than remain long term.
Exit emphasis
The lender must see evidence that the borrower can repay at the end of the private facility.
This does not mean the lender ignores income, credit conduct or documents. Requirements vary, and valuation, legal due diligence, security, purpose, net funds and exit still need to be acceptable.
Private finance can carry higher total costs than conventional bank finance. Compare the full structure and obtain professional advice before proceeding.
What replacement structures may be considered?
- Short-term first-mortgage refinance: pay out the current lender and provide time to meet bank conditions or complete an alternate exit.
- Additional-property security: another acceptable property may strengthen the overall position, subject to valuation and existing debt.
- Second mortgage: approved commercial funds may address a defined shortfall behind an existing first lender, subject to consent, equity and priority.
- Sale bridge: refinance to an orderly property sale where the campaign, timing and conservative net proceeds are evidenced.
- Completion or rectification finance: fund defined works that must occur before sale or longer-term refinance.
- Debt reduction plus refinance: borrower contribution, asset sale or creditor settlement reduces exposure to a supportable level.
The replacement facility should solve the verified payout and approved costs. A loan limit that appears sufficient can still create a settlement shortfall after retained interest, establishment, legal, valuation and discharge costs.
How do you build an exit after a bank decline?
Record the bank’s unmet requirements
Income history, debt reduction, leasing, completion, valuation, tax compliance or another specific condition.
Create a milestone plan
Set out what will be completed, by whom, at what cost and by what date during the private-loan term.
Confirm the exit lender or sale pathway
Use written broker feedback, lender criteria, sale evidence or other independent material.
Calculate debt at exit
Include interest, fees, required works, holding costs and a realistic timing buffer.
Provide a fallback
Identify an alternate lender, additional equity or orderly property sale if the primary bank refinance remains unavailable.
A future bank approval cannot be assumed. The exit should identify measurable conditions and evidence that the borrower is capable of meeting them.
What documents strengthen the replacement application?
- bank decline or broker feedback and outstanding conditions;
- current loan agreement, maturity correspondence and payout;
- property title, leases, insurance and valuation information;
- company, trust, director and guarantor records;
- business financial statements and management accounts;
- cash-flow forecast and explanation of assumptions;
- tax-debt and material-creditor position;
- planning, construction or rectification documents where relevant;
- complete sources and uses, including all settlement deductions;
- evidence for the proposed refinance or sale exit; and
- a timeline showing milestones before the facility expiry.
Business.gov.au identifies financial reports, cash-flow information, forecasts, leases, business planning and personal financial information among the material that may be required for a business-loan application.
Compare the complete transaction, not only the rate
- approved facility amount and actual net settlement funds;
- ordinary interest, default interest and interest treatment;
- establishment, legal, valuation, broker and discharge costs;
- loan term, extension rights and extension costs;
- security properties, guarantees and priority arrangements;
- conditions before documents and settlement;
- reporting and milestone requirements during the term;
- repayment amount at the expected exit date; and
- consequences if the exit is delayed.
Government guidance notes that non-bank lenders may use more flexible criteria than traditional banks but that rates and fees vary. Borrowers should read the terms carefully and obtain advice.
Related reading: expiring private loan refinance, commercial mortgage default refinance and distressed commercial property valuation.
A bank declines a refinance before private-loan maturity
Situation: A commercial property owner’s bank refinance is declined because the latest financial period and lease profile do not meet the bank’s requirements.
Finance requirement: Refinance the verified private-lender payout and approved costs before maturity.
Potential structure: A short-term replacement first mortgage, subject to property valuation, borrower, purpose, net funds and exit assessment.
Exit: Longer-term refinance after a documented period of improved financial reporting and lease stabilisation, with an orderly property sale as the fallback.
This is a hypothetical illustration only, not a completed transaction or a promise of approval, refinance, extension or settlement.
What weakens the recovery plan?
- sending the same unchanged application to multiple lenders;
- not obtaining the actual bank decline reason;
- assuming the current lender will extend;
- understating the payout and settlement deductions;
- using an old valuation after property changes;
- requesting extra funds without a business-purpose budget;
- treating short-term finance as the exit itself;
- failing to address the bank’s unmet conditions; or
- having no fallback if the bank refinance remains unavailable.
Bank-declined commercial refinance FAQs
Can private finance replace a declined bank refinance?
Potentially. The private lender will conduct its own assessment of the property, payout, borrower, purpose, risks, required net funds and repayment exit.
Does a bank decline mean the property is unacceptable?
Not necessarily. The decline may relate to serviceability, policy, valuation, conduct, documents, timing or a combination of factors. Obtain specific feedback.
Can the exit be another bank application?
Potentially, where the unmet bank conditions are identified and there is a credible, timed and evidenced plan to satisfy them.
Can additional working capital be included?
Potentially for a genuine commercial purpose, subject to value, total exposure, budget, borrower assessment and exit.
Can another property improve the application?
Potentially. Additional security may support the transaction, subject to ownership, value, existing debt, consent and lender criteria.
What if the current loan is already in default?
Obtain legal advice, a current payout and all notices immediately. A replacement lender will need to assess the default position, time available, costs and exit.
Official Australian references
Has a bank declined an existing commercial property refinance?
Basic Finance Loans can review the decline, payout, property, deadline, required net funds and exit to identify potential commercial and private refinance structures.
Discuss the declined refinance
Commercial and business-purpose finance only. Information is general and does not constitute legal, tax, accounting, insolvency, valuation or financial advice. Finance is subject to assessment, valuation, lender criteria, documentation, acceptable security and exit.