Your business loan was declined. What to do in the next fortnight

A decline is not a judgement on the business. It is one lender’s answer to one version of the file, on one day, against one credit policy. The useful question is not “why did they say no” in the abstract — it is which no it was, because that decides whether the next step is a different lender, a different structure, or three months of tidying up.

The next fortnight is when that is cheapest to find out. Here is the order.

Day one: ask for the reason, in writing

Do this before anything else, because everything else depends on the answer.

If the lender is a bank that subscribes to the Banking Code of Practice and your business meets the Code’s small business test, the Code says: “If we decide not to approve a Loan to you, we will tell you the general reason why, unless it is reasonable for us not to do so.”

Two words in that are worth noticing. General — you are entitled to the category, not the credit memo. And unless it is reasonable for us not to do so — there are cases where they will not tell you. But most declines are ordinary, and asking a plain question usually gets a plain answer.

The Code’s small business test is a threshold, not a vibe. A business is a small business under the Code if it, or its business group, had annual turnover of less than $10 million in the previous financial year, has fewer than 100 full-time equivalent employees, and has less than $5 million of total debt to all credit providers — counting undrawn amounts on existing facilities and the loan being applied for.

Ask by email, so the answer is in writing. Ask for the general reason, and ask one follow-up: whether the decline was on policy or on assessment. Those are different animals, and the distinction is the most valuable thing you will learn all fortnight.

What each reason actually means

Most declines fall into a handful of buckets. What matters is how long each one takes to fix, because that determines whether you re-apply this month or this quarter.

The bottom two rows are the ones worth checking first, because they cost nothing to fix and they are more common than people expect.

Fix the ATO position before you do anything else

If tax was part of the reason, it is almost always the first thing to deal with, and it is more fixable than it feels.

Lenders do not treat “has an ATO debt” and “has an ATO debt on a payment plan they are meeting” as the same thing. The first is an unmanaged liability with an unknown ceiling. The second is a known, scheduled creditor — and a business that arranged it is a business that deals with problems rather than hoping they resolve.

The ATO publishes how payment plans work, including that a business can generally set one up online where the debt is under $200,000, and that general interest charge keeps accruing on the balance and compounds daily. That last point is why a plan is a step toward a loan rather than an alternative to one: it stops the position deteriorating, it does not make it cheap.

Lodgements matter as much as the balance. A lender that cannot see a current BAS cannot verify turnover, and an overdue lodgement makes every number in the file provisional.

Pull both credit files, not one

There are two, and business owners routinely check the wrong one.

Your consumer credit file matters because most small business lending involves a director’s guarantee, so the director is assessed as a person. Under the consumer credit reporting rules the OAIC explains, most default listings stay on file for five years and repayment history information for two. Paying a default does not remove it, but a listing marked as paid reads very differently to an outstanding one.

The business’s commercial credit file is separate, held by commercial bureaux, and is where court judgements, external administrations and trade payment behaviour show up. It is not governed by the same consumer rules, and it is the one nobody looks at until a decline.

Get both. Read them for errors — they are more common than you would like — and read them for the story a credit assessor will read. A cluster of enquiries across six weeks says “applied everywhere” whether or not that is what happened, which is one practical argument for going to the market once, properly, rather than one lender at a time.

What a second-tier or non-bank lender does differently

“Go to a non-bank” is advice given far too casually. They are not softer banks. They are different businesses with different funding, different security appetites and different pricing, and they suit some declines and not others.

The market has genuinely widened. The Reserve Bank’s March 2026 Financial Stability Review notes that “there has been strong growth and competition in business lending over recent years, but overall lending standards appear to remain prudent”, and that the greater supply of credit has reflected both improved ability to assess business cash flows and “increased competition both among banks and from non-bank lenders and private credit”.

Read the second half of that sentence as carefully as the first. More lenders does not mean looser lenders.

Where the difference actually shows up:

• How cash flow is read. Some lenders assess from bank statements and merchant settlement data rather than from lodged financials, which suits a business whose most recent year is much better than its last lodged one.
• What counts as security. Property, plant, receivables, and in some cases nothing but a personal guarantee — each has its own set of lenders.
• Speed against price. Faster and less document-hungry generally means more expensive. That is a trade, and it is sometimes the right one for a time-limited opportunity and the wrong one for working capital that never gets repaid.
• Term and amortisation. A facility that fits the cash flow can turn a serviceability decline into an approval without anything else changing.

If the original decline was on policy, this is the whole answer. If it was on assessment, a different lender changes the price and possibly the structure, but it does not change arithmetic.

When to re-apply, and when not to

Re-apply when something in the file has actually changed: a payment plan in place, a quarter of clean statements, a new BAS, more security, a smaller ask, a different structure.

Do not re-apply when the only thing that has changed is which lender’s name is on the form and the numbers are identical. Each formal application leaves an enquiry, and a run of them is itself a negative signal.

The middle path is the one most people miss: ask a broker to test the deal against several lenders’ policies before anything is lodged. Policy fit can usually be established without an application, which means one enquiry with the lender that will actually take it — not five with five banks.

When a complaint is the right move

This is worth being precise about, because a complaint aimed at the wrong thing wastes weeks.

External dispute resolution exists for how you were treated, not for whether a lender should have said yes. ASIC’s Moneysmart sets out the sequence: complain to the business first, in writing, in what is called internal dispute resolution; and if that does not resolve it, go to the free external dispute resolution scheme the firm belongs to. Moneysmart lists when an EDR scheme can help — where the business did not respond within a reasonable time, where you are not happy with how it dealt with your complaint, or where you are not happy with the offer it made.

So: a bank that ignored your hardship request, took a fee it should not have, gave you the wrong information, or failed a commitment in the Banking Code — that is a complaint with somewhere to go. “They declined my application and I disagree” is a commercial decision, and the answer to a commercial decision is another lender.

The fortnight, in order

1. Day 1. Email the lender. Ask for the general reason in writing, and whether it was policy or assessment.
2. Day 1–2. Pull the director’s consumer credit file and the business’s commercial file. Read both for errors.
3. Day 2–3. Establish the ATO position exactly: balance, lodgements, any existing plan. Set up a payment plan if there is a debt without one.
4. Day 3–5. Get the last twelve months of business bank statements and the most recent lodged financials and BAS in one place, in a form someone else can read.
5. Day 5–7. Work out which bucket the decline was in, and what the smallest change is that moves it.
6. Week 2. Test the deal against lender policy before lodging anything. Adjust the amount, the term or the security if that is what makes it fit.
7. Week 2. Lodge once, with the lender whose policy the deal actually matches.

That is a fortnight, and it is most of the difference between a second decline and an approval.

If a bank has just said no, that is the position we are asked to take on most often — see how we approach business loans and second-tier lending, or book a call and bring the decline letter with you.