Quick answer
If your business loan was declined, call or write to the bank and ask for the reason. Under the Banking Code of Practice, subscribing banks tell small business customers the general reason a loan wasn't approved, unless it's reasonable not to. Knowing the reason tells you whether to fix something and reapply, try a lender with a different policy, or change the amount, term or security you're asking for.
Key points
- Banks that follow the Banking Code tell small business customers the general reason for a decline.
- Ask by phone, then confirm in writing so you have a record.
- The reason usually points to one of four fixes: timing, credit, security or the size of the request.
- Avoid applying everywhere at once; each application can add a credit enquiry.
- If you've been refused credit in the past 90 days, you can get a free copy of your credit report.
A “no” without a reason is only half an answer
Being declined for a business loan is frustrating enough. Being declined with no explanation is worse, because you don’t know what to fix. Was it the credit file? The trading history? The industry? The amount? Without knowing, it’s tempting to apply elsewhere and hope, which often leads to the same answer and another enquiry on your credit report.
The good news is that you can usually find out. And the call to ask takes about five minutes.
What banks commit to
Most Australian banks subscribe to the Banking Code of Practice. The current version, the 2025 Code, has applied since 28 February 2025 and covers small business customers. It includes a specific commitment for small business loans: if the bank decides not to approve a loan, it will tell you the general reason why, unless it’s reasonable not to.
“General reason” means you won’t necessarily get the internal scoring detail, but you should get enough to understand what stood in the way.
Non-bank lenders aren’t all covered by the Banking Code, but it’s still worth asking. Many will tell you.
How to ask: a phone script
Call your business banker or the bank’s business lending line. Have your application reference or date handy.
“Hi, I applied for a business loan of about $180k on the 3rd of last month, reference 88213, and I’ve been told it wasn’t approved. I’d like to understand the general reason so I know what to work on. Can you tell me what it was?”
Illustrative example only.
If the first person can’t help, ask who can, and when they’ll call back. Then follow up in writing:
“Thanks for speaking with me today. To confirm, you advised that our application was declined because [reason]. Please let me know if I’ve misunderstood.”
Having it in writing helps if you later need to explain the decline to another lender, or raise a complaint.
What the common reasons mean
Most decline reasons fall into a handful of groups. Each points to a different next step:
| Reason given | What it usually means | Possible next step |
|---|---|---|
| Insufficient trading history | Below the bank’s minimum period | Wait, or look at lenders or secured options with different requirements |
| Credit history | Something on the business or director’s file | Get your credit report, check it’s correct, explain it upfront next time |
| Serviceability | Repayments look too high for current income | Ask for less, a longer term, or restructure other debts |
| Security | Not enough, or the wrong kind | Consider property security, or a lender that values it differently |
| Industry policy | The bank limits lending to your sector | Try a lender without the same restriction |
| Tax position | ATO debt or unlodged returns | Catch up lodgements, arrange a payment plan, then revisit |
| Incomplete information | Missing documents or unclear figures | Resubmit properly, or ask what was missing |
Check your credit report
If the reason involves credit history, or you’re not sure what’s on your file, check. In Australia you can get a free copy of your credit report from each credit reporting body every three months, and also if you’ve been refused credit within the past 90 days. Equifax and Experian are the main bodies, and they may hold different information, so check both.
If something is wrong, you can ask for it to be corrected. If it’s right, you’ll at least know exactly what the next lender will see. Our page on explaining past credit problems shows how to present it.
Don’t apply everywhere at once
After a decline, it’s natural to want a quick yes somewhere else. But firing off several applications in a few days has a cost. Each formal application can be recorded as a credit enquiry, and a cluster of recent enquiries can itself make the next lender cautious. Credit enquiries can stay on a report for five years.
A better approach:
- Understand the reason.
- Decide whether to fix it first, or find a lender whose policy suits.
- Have one conversation with someone who can steer you, then apply once, where it’s most likely to succeed.
Taking the reason to your next conversation
When you speak to another lender, the decline reason is useful, not embarrassing. It tells a specialist which lenders share the same policy and which don’t. Our page on what to say when another lender said no has scripts for exactly this.
A few examples of how the conversation shifts:
- Declined for trading history, but you own property? Property-secured options can be more flexible. See describing property as security.
- Declined for industry policy? Other lenders may not share the restriction.
- Declined for serviceability? Talk through a smaller amount or longer term, or whether restructuring existing debts helps. Our questions to ask a lender cover how to compare.
- Declined as a newer business? Our page on newer businesses explains what’s realistic.
If you think the decision was unfair
A decline isn’t automatically unfair, but if you believe the bank didn’t follow its own process or didn’t treat you properly, you have options. Start with the bank’s internal complaints process; AFCA recommends raising concerns with the firm first. If that doesn’t resolve it, the Australian Financial Complaints Authority independently assists small businesses with complaints about member financial firms, and its service is free.
A worked example
A three-year-old physiotherapy practice applies to its bank for $220k to fit out a second clinic and is declined. The owner calls and is told the general reason: the bank’s policy requires more trading history for a loan of that size without property security. The owner confirms this by email, checks her credit reports (both clear), and talks to a lending specialist about a property-secured option using equity in her home, which the bank hadn’t considered because she hadn’t offered it.
Illustrative example only.
What to do in the week after a decline
A decline can knock your confidence, and it’s easy to lose a week to frustration. A simple plan helps:
- Day one: ask the bank for the general reason, and confirm it by email.
- Day two: request your credit reports from Equifax and Experian if credit history might be involved.
- Day three: check the basics lenders look at. Are all BAS and returns lodged? Is there an ATO balance? Are the business bank statements clean?
- Day four: decide whether the reason is something to fix first, or a policy mismatch.
- Day five: have one conversation with a specialist who can tell you which lenders see your situation differently.
If the decline came with a deadline still hanging over you, such as a settlement or a tax date, compress the plan and ring sooner. Our page on what to say about a tight deadline shows how to set out the date.
It’s also worth thinking about whether the amount or term you asked for was the right one. A request that was slightly too large, or a term too short for the repayments to fit comfortably, is a common reason for a serviceability decline. A smaller amount, a longer term, or a different mix of secured and unsecured facilities can sometimes turn the same business into an approval.
Turn the “no” into a plan
Five minutes on the phone to your bank can save weeks of guessing. Once you know the reason, you can decide what to do next. If you’d like help working that out, call 03 4059 1829 or start a 60-second enquiry and mention the decline and the reason given. There’s no credit check when you first enquire, so talking to us doesn’t add another enquiry to your file. Your details stay with one team rather than being blasted to a list of lenders, and a real specialist looks for the lender whose policy genuinely fits. Please share the decline reason accurately; it’s the fastest route to a better match next time.
Frequently asked questions
Does my bank have to tell me why it declined my business loan?
Under the Banking Code of Practice, banks that subscribe to it tell small business customers the general reason they decided not to approve a loan, unless it's reasonable for them not to.
How do I ask for the reason?
Call your banker or the bank's business line, reference your application, and ask directly: 'Can you tell me the general reason the application wasn't approved?' Then confirm the answer by email.
Can I get a free credit report after being declined?
Yes. You're entitled to a free copy of your credit report if you've been refused credit within the past 90 days, as well as every three months.
Should I reapply straight away somewhere else?
Not blindly. Understand the reason first. Each formal application can be recorded as an enquiry on your credit file, and several in a short period can make lenders more cautious.
What if I think the decline was unfair?
Raise it with the bank through its complaints process first. If it isn't resolved, the Australian Financial Complaints Authority is free for small businesses and handles complaints about member firms.