The Bank Said No to a Property-Secured Loan. What Now?

If a bank declines a property-backed business loan, a private lender can often still fund it. Private lenders assess the property and the exit rather than a rigid servicing test, so a strong asset with a clear repayment plan can get done even when the bank form says no.

A bank no is usually about the bank's rules, not your deal. Here is why it happens and what actually happens next.

Why do banks decline good property deals?

Usually because of timing, servicing templates, or the type of borrower, not because the deal is bad. Banks run standardised tests, and a strong deal that does not fit the template gets declined.

Common reasons: the borrower is self-employed with lumpy income, the loan is needed faster than the bank can move, the property or purpose is outside the bank's box, or the entity is a company or trust the bank finds awkward. None of these mean the deal cannot be funded.

What does a private lender look at instead?

The security, the loan-to-value ratio, the purpose, and above all the exit. If the asset is sound and there is a credible way to repay, the deal can work.

A private lender is not ignoring risk. It is weighing it differently. Instead of asking whether your last two years of tax returns fit a formula, it asks whether the property covers the loan and whether the exit, a sale or a refinance, is real.

What the bank weighs vs what a private lender weighs:

• Standardised serviceability vs security value and LVR
• Two years of clean financials vs the exit: sale or refinance
• Fitting the credit template vs the purpose and the deal on its merits
• Slow, committee-driven process vs a fast, direct answer

Will a private lender lend more than the property is worth?

No. Private lenders are conservative on loan-to-value. Expect a first mortgage up to around 65 to 70% of value, and less on a second mortgage or a specialised property. The equity is the safety margin.

This is the trade. A private lender moves faster and is more flexible on the borrower, but it protects itself with a lower LVR and a tested exit. If the numbers do not leave a margin, a good private lender will say no too, and quickly.

What should you have ready to move fast?

The property details and value, how much you owe, the purpose, your entity type, and a clear exit. With those, a private lender can usually give an indicative answer within a day.

The faster you want to move, the more it pays to arrive organised. A complete picture on day one is the difference between a two-week settlement and a two-month one.

Broker takeaway

A bank no is not the end of a deal, it is a signal to change lenders. If your client has a solid asset and a real exit, send us the scenario. We will give you a straight answer quickly, including an honest no if it does not fit.

Vía Private is an Australian non-bank private credit lender providing property-secured commercial loans to companies and trusts for business and investment purposes across NSW, VIC, QLD and the ACT. All lending is subject to credit approval and valuation. General information only, not financial or credit advice.