A difficult business loan is one the usual lender will not write because of defaults, an ATO debt, irregular cash flow, no financials or a deadline. HomeSec lends from $20,000 to $5,000,000 against equity in real estate, so the test is the property, the purpose and the exit. First and second mortgages can fund in as little as 24 hours from a clean, complete scenario.
"Difficult" is the word business owners use after a bank or an online lender has turned them down. It rarely describes the business. It describes the lender's rules, and the same loan that fails one lender's test passes another's, because the two are testing different things. This page sets out what makes a loan difficult, what a property-secured lender looks at instead, and where to read the detail on each problem.
Almost every refusal falls into one of seven groups. For each, the usual lender is testing something the business cannot show, and a lender that lends against real estate is testing something it can.
| The situation | Why the usual lender declines | What we look at instead | Read more |
|---|---|---|---|
| Defaults or a bad credit file | A credit score decides it | The property, the purpose and the exit | Page |
| An ATO debt or payment plan | An open tax debt fails serviceability | Equity can pay the ATO and give the business room | Page |
| No financials or tax returns | Statements are the whole application | No financial statements to apply | Page |
| Irregular or seasonal cash flow | Last quarter's turnover decides it | Equity, not the last three bank statements | Page |
| A bank called in the facility | A covenant breach ends the loan | A first mortgage that pays the bank out | Page |
| A start-up or a discharged bankrupt | No trading history, no loan | A borrower with property and a plan | Page |
| Needs the money by a date | An approval takes weeks | A second mortgage that leaves the bank loan alone | Page |
Every application is subject to assessment and approval. Credit provided for those purposes is not regulated under the National Consumer Credit Protection Act 2009 (the NCCP Act), and the protections available to consumer borrowers do not apply.
A bank tests serviceability: can the business's income cover the repayments, shown by financials and tax returns, over a process that takes weeks. An online cash-flow lender tests turnover and bank statements, fast, by algorithm, and says no the moment the recent months look thin. Neither looks at the property the owner holds, and for an owner with equity in real estate that is the strongest thing they have. Our guide to cash-flow lenders compared sets out how the two kinds differ, and declined by a cash-flow lender covers what to do next.
If the client has real estate security, or equity in it, the loan is no longer difficult. It becomes a question of how much equity there is and what the money is for. A second mortgage registers behind the existing bank loan and leaves it untouched; a first mortgage pays the existing lender out; a caveat loan is the quicker of the three where the first lender is slow. Interest can be capitalised for up to six months, so there can be no repayments for up to the first six months while the business recovers, and the term is open, so there is no date set by the lender.
Each of these is modelled on a loan we settled in the month shown. The client, suburb, property and figures are changed to protect clients, and the photograph is a representative image.
Refinance business cash-flow debts
$300,000 against a $1,150,000 property · 63.5% combined LVR · 6 months
Two cash-flow lenders had said no because the business's last few months of bank statements looked thin. The directors owned their home with plenty of equity. We registered a second mortgage behind the existing bank loan, left that loan exactly where it was, and capitalised the interest for the term so nothing was payable while the business recovered.
Pay out a lender in arrears and an ATO payment plan
$700,000 against a $1,350,000 property · 51.9% combined LVR · 12 months
A non-bank lender had issued default notices over the property and the company had fallen behind on an ATO payment plan at the same time. One first mortgage paid out the arrears loan and the ATO balance in a single settlement, so two pressures became one lender and one repayment plan, with a refinance to a bank as the exit.
Stock and staffing ahead of the peak trading season
$200,000 against a $980,000 property · 59.2% combined LVR · 6 months
The owner of a hospitality business needed stock and staff in place before the dry-season peak, and the bank's overdraft review was weeks away. A second mortgage behind the existing home loan put the working capital in hand before the season opened, and the sale of the season's trade was the plan for repaying it.
See all recent first and second mortgage examples
Tell us the property, what is owing on it and what the money is for. The application is three short questions, with no credit check to apply and no financial statements. Check business loan eligibility first if you want to see the limits, or call us on the number in the page header.
If a bank or a cash-flow lender has already said no, the question is whether the property you own can say yes.
If you are reading this because money is tight, it may be that what you actually need is fast business finance — and HomeSec can lend with very few qualification criteria. All you need is sufficient equity in real estate and a business purpose: no financials, no valuation, no credit score threshold, funded in as little as 24 hours from a clean, complete scenario. Best of all, the first six months can come with no requirement to make any payment.
That's the HomeSec Advantage.
See if you qualify in sixty seconds
Three short questions, no credit check to apply and no financial statements. A Lending Manager reads it and calls you back with a real answer — not a call centre, not an algorithm.
That's the HomeSec Advantage.
Reviewed by Jason Brockmuller, Joint Chief Executive
