Key takeaways
- •When your bank will not renew your commercial loan, its letter sets a date by which the full balance must be repaid. On an interest-only loan, that balance is the whole original loan amount.
- •Under the Banking Code of Practice, a bank that has signed up to it gives a small business at least 3 months' notice of a decision not to extend an interest-only loan, or a loan with a balloon payment, that is not in default.
- •The 3 months' notice under the Banking Code of Practice is notice of the bank's decision, not a right to have your loan renewed, and a bank that does renew is not bound to keep the same terms.
- •The Reserve Bank reports that most lenders have not materially changed their willingness to lend to business in 2026, so a bank's refusal to renew is usually that one bank's view of one loan.
- •A private loan from Secured Lending, from $250,000 and backed by property, can repay your bank on or before the date in its letter, then run for 1 to 24 months while a new bank loan, a sale or a smaller refinance is arranged.
- •Secured Lending lends its own funds and values the property with its in-house team, so it decides on a loan in hours and can settle within 24 hours.
If your bank has written to say it will not renew or extend your commercial loan, the letter gives a date by which the full balance has to be repaid. On an interest-only loan or a loan with a balloon payment, that is all or most of the original amount, due in one payment. That is a hard letter to receive, and the date in it is the one to plan to.
We would be glad to help your business with this. If your business or a director owns property, a private loan backed by that property is a good fit for this problem. We lend our own funds and can settle within 24 hours, so the loan can give your business the funds to repay the bank in full on or before that date. It then runs for a set term of months, giving your business time to arrange the next bank loan, sell a property or complete a smaller refinance without a repayment date set by the bank.
Why a bank does not renew a commercial loan
The Reserve Bank raised the cash rate target to 4.60% on 29 September 2026, its fourth increase this year. A higher interest bill is one reason a bank may offer a smaller loan at renewal, or none.
It does not mean banks have stopped lending to business. In its October 2026 Financial Stability Review, the Reserve Bank reports that, based on its liaison, most lenders have not materially changed their willingness to supply business credit this year. The exception it names is some small reduction in appetite for new lending to the transport industry, because of that industry's exposure to higher energy prices.
So a decision not to renew is usually one bank's view of one loan. The common reasons are:
- •the industry the business trades in, and the bank's appetite for it
- •the size of the loan
- •a lower value on the property securing the loan, such as a director's home while housing prices are declining
- •lower interest cover now that the rate is higher
Your broker or accountant is the right person to ask the bank which of these applied to your loan.
How much notice your bank should give you
The Banking Code of Practice sets the notice a bank gives a small business. Paragraph 93 of the 2025 Code is the one to compare with your bank's letter: "If you are not in Default, and under the Loan contract the principal owing is not to be fully repaid at the end of its scheduled term by regular periodic repayments, we will give you notice of our decision not to extend your Loan, at least 3 months before you need to repay your Loan in full."
The 3 months applies only when all of these are true:
- •Your bank has signed up to the Code. Signing up is a condition of membership of the Australian Banking Association for member banks with a retail presence in Australia.
- •Your business meets the Code's small business test, set out below.
- •The loan is not in default.
- •The loan is not set to be fully repaid by its regular repayments by the end of its term, which is the case for an interest-only loan or one with a balloon payment.
Under the small business test, a business qualifies if its turnover was under $10 million in the previous financial year, it has fewer than 100 full-time equivalent employees, and it owes less than $5 million in total to all credit providers, counting undrawn limits but not debt covered by the National Credit Code. The test is applied when the loan is obtained, and across the whole group where the business is part of one. A business above any of these limits relies on what its loan contract says about notice, which can be shorter.
The notice is notice of a decision, not a right to renewal, even for a loan that has never missed a payment. Where a bank does offer to renew, paragraph 94 makes clear that the terms can change: "If we decide to extend or refinance your Loan, we are not required to do so on the same terms." A renewal offer can come with a lower limit, a paydown due by the expiry date, a shorter term or a higher rate.
If the bank has received a valuation of a commercial property that you paid for, the Code requires the bank to give you a copy of that valuation and the valuer's instruction, unless enforcement proceedings have started. Ask for it, because it gives the next lender a recent figure.
Whether the bank's notice meets the Code or your contract, and what the contract allows once the repayment date passes, are questions for your solicitor. We are a lender, and we do not give legal advice. Whatever the notice period, plan to the repayment date in the letter.
How a private loan repays the bank
The business is the borrower, and at settlement the loan funds are paid to the business, which uses them to repay the bank. The loan is backed by real property: a first or second mortgage over residential, commercial or industrial property owned by the business or a director. That can be the business premises property, an investment property or the director's home. The business then repays us through a defined exit, such as a new bank loan, the sale of a property or a smaller refinance.
| Loan size | From $250,000, with larger loans assessed case by case |
| Interest rate | From 9.7% p.a. for a refinance or bridging loan, from 11.95% p.a. for a second mortgage |
| Term | 1 to 24 months, typically 3 to 6 months |
| Security | A first or second mortgage over residential, commercial or industrial property |
| Maximum loan-to-value ratio | 70%. The bank payout, any paydown and costs sit inside 70% of the property's assessed value, combined with any first mortgage where ours is a second |
| Purpose | Business purposes |
We lend our own funds. Depending on what the bank has offered, the loan does one of three jobs.
Repay the bank loan in full. The loan covers the bank's written payout figure, and the business repays the bank on or before the repayment date. The bank loan is closed, so the bank's changed terms no longer apply. This is how we approach refinancing a business loan when a bank will not roll it over.
Fund the paydown the bank asks for. If the bank will renew a smaller loan once part of the balance is repaid, our loan can provide that amount through a second mortgage behind an existing loan, or a mortgage over another property you or the business own. The bank can then renew the smaller loan on the terms in its offer, and our loan is repaid from a sale or from a later refinance.
Run until the next bank is ready. We set the term to cover the time a new bank application needs, so your broker can apply on a full set of financials rather than against the old bank's date. It is the same approach as bridging finance for a bank exit, with the next bank loan as the repayment.
How our loan will be repaid is part of how we assess it, so it helps to name the route at the start: the next bank loan, a sale or a refinance, and roughly when. Our guide to how a private loan is repaid at the end of its term sets out the common routes.
Whether the interest is tax deductible is a question for your accountant. We are a lender, and we do not give tax advice.
How fast it can be in place before the bank's date
We decide in hours, and issue a letter of offer immediately once terms are agreed. Our in-house valuation team values the property, so there is no wait for an external valuer. Settlement can happen within 24 hours, and because we lend our own funds, there is no third-party funder to wait on.
Work back from the repayment date in the bank's letter, and ask the bank for its written payout figure early. Ask for our full offer in writing before you compare it with the bank's renewal terms.
Frequently asked questions
Can a bank refuse to renew my business loan if I have never missed a payment?
Yes. Paragraph 93 of the Banking Code applies to borrowers who are not in default, and it gives notice of the bank's decision, not a right to renewal. A private loan can give the business the funds to repay the bank in full on or before the repayment date in its letter.
Does the Banking Code apply to my business?
It applies to banks that have signed up to it, and its 3 months' notice applies to a business that meets its small business test: turnover under $10 million, fewer than 100 full-time equivalent employees and under $5 million of total debt, including undrawn limits, tested across the business group. Your solicitor can confirm whether it covers your loan.
Will another bank lend to me after this?
The Reserve Bank reports that most lenders have not materially changed their willingness to lend to business this year. Our loan gives you a set term in which your broker can apply to another bank on a full application, and repaying our loan from a new bank loan is one of the repayment routes we assess when we approve it.
What property can back the loan?
Our loans are backed by residential, commercial or industrial property owned by the business or a director, including property already held in a company or a trust. The loan can be a first mortgage, or a second mortgage behind an existing loan, up to a maximum loan-to-value ratio of 70% across both.
How Secured Lending Can Help
We would be glad to help your business repay the bank by the date in its letter. Our loan gives your business the funds to repay the bank in full, or to make the paydown the bank has asked for, and then runs for a set term while the next bank loan, a sale or a smaller refinance is arranged. Your business then repays us through that defined exit.
A private loan suits this problem because it is quick and because it is secured against property. We lend our own funds and our in-house team values the property. We decide in hours, issue a letter of offer as soon as terms are agreed, and can settle within 24 hours.
We provide secured loans backed by real property. If you would like us to look at your situation, it helps to have these to hand:
- •The bank's letter, or the repayment date it gives.
- •The bank's written payout figure, or the paydown the bank has asked for.
- •The property that could back the loan, its estimated value and any loan on it, and any other property you or your business own.
- •How you plan to repay our loan, and roughly when.
We come back with the loan we can provide inside 70% of the property's value, the term, and how it would be repaid. If the repayment date is only a few weeks away, a phone call is the quickest start. You are welcome to call us on 1300 795 175 to talk it through, or send the details through and we will come back to you.
