When Your Bank Stops Lending to Your Industry: What to Do Next
Business Owners
Lender appetite · Business refinance · Self-employed
A letter saying your lender is stepping back from your industry is not automatically a decline, a recall or debanking. This guide shows how to identify which event actually happened, what it can mean for your existing facilities, what evidence a replacement lender will want, which protections follow you, and how to refinance without turning a clean policy exit into a messy credit story.
Quick Answer
When a bank stops lending to your industry, it is usually a change in that lender's credit appetite, not a negative finding about your business. There is no single government-mandated banned-industry list that every Australian business lender must follow. Check the facility you already have before doing anything else: a term loan generally continues under its contract, while an overdraft is at call. Then take the lender's written notice and one complete finance pack to lenders whose current appetite includes your sector rather than applying widely to find out.
Also searched as: bank no longer lends to my industry, lender exited my industry Australia, restricted industries bank lending Australia, business loan sector exit refinance.
Is this about you, or about your industry?
If the letter says the lender is stepping back from your industry or changing its credit appetite, the decision is about the lender's portfolio rather than a negative assessment of your business. A lender decline is different: that is a decision about your particular file. The two can arrive in similar-looking letters, but they require completely different responses.
The tell is usually in the language. A category decision talks about policy, strategy, portfolio and appetite. A file decision talks about you: your trading, your serviceability, your security, your conduct. If the letter never mentions anything specific to your business, it is very unlikely to be about your business.
Four other things get filed under the same heading and are not the same problem. A facility that is not renewed at expiry, a facility that is recalled or demanded, a transaction account that is closed, and a facility that changes hands all have different mechanics and different answers. The table below separates them, and each row points at where the answer actually lives.
| What happened | What it is a decision about | What a new lender reads into it | Where the answer lives |
|---|---|---|---|
| Your application was declined | Your file, assessed on its merits | Something in the file did not fit that lender's policy, and the next lender will want to know what | Business loan declined |
| Your facility was not renewed at expiry | Either your file or the category, and the letter usually says which | Neutral until explained, and the explanation is the work | Facility not renewed at expiry |
| Your facility was recalled or a demand was made | An event of default or a review event under the agreement | Serious, and the timeline is short | Facility recalled or demanded |
| Your transaction account was closed | A banking-services decision that may involve commercial, risk or compliance factors | Not the same thing as a credit decline, although the new lender may still ask what happened | The bank's own complaints process first, then the external complaints scheme if the firm is a member. Treat account closure and credit withdrawal as separate events |
| Your lender stopped writing new business in your sector | The lender's own credit policy at portfolio level | Nothing about you, once the letter is produced | Matching your file to a lender whose policy still covers your sector, which is the work the rest of this guide sets out |
| Your facility changed hands | The lender's balance sheet, not your conduct | Nothing, provided you keep paying and the terms are clear | Assignment or novation, and which one it was decides which terms now govern |
There is a reason this distinction is worth getting right on day one. A borrower who believes they have been declined starts trying to fix themselves. They wait, they tidy, they hold off applying, and they lose months. A borrower who understands that a category moved starts looking for a lender whose category still includes them, which is a matching exercise and a much shorter one. Our read on the matching problem behind most declines covers that difference in more detail.
What to do first, in order
- Read the letter for category language, and keep it. If it talks about portfolio, strategy, policy or appetite and says nothing about your trading, it is evidence in your favour rather than a decline. It is the single most useful document you now hold.
- Ask for the position in writing. Ask three things: whether existing facilities are affected, what happens at your next review or expiry, and whether the decision is about the sector or about your file. A written answer is something a new lender can read. A phone call is not.
- Pull out the facility agreement. Find the expiry date, the review clause, the event of default clause and the transfer clause. Those four provisions, not the letter, decide what can actually happen to you and when.
- Assemble the file once. Financials, the tax position, aged debtors and creditors, and the letter itself. Every lender you speak to will want the same pack, and assembling it once is what turns a scramble into a process.
- Test the market through one channel rather than one lender at a time. Applying to lenders individually to find out whether it is really you is the expensive way to answer a question that can be answered before an application is lodged.
What should you give the next lender to prove this was a policy exit?
The next lender needs evidence of two different things: why the old lender wants you to move, and why the business itself remains fundable. Do not make the credit team reconstruct either story from scattered emails and documents.
| Document or evidence | What it proves | What to check before sending it |
|---|---|---|
| The bank's sector-exit or policy letter | Why the relationship is moving | Use it as evidence only where the wording actually says the decision is about policy, portfolio, strategy or sector rather than arrears, conduct or serviceability |
| Current facility statement and payout information | What has to be refinanced | Confirm the facility, limit, balance, expiry and any amount required for payout |
| Facility agreement | What can happen before the refinance completes | Identify the expiry, review, at-call, default, variation and transfer provisions |
| Current financials and management information | Whether the business itself can support the replacement debt | Give the lender a current picture rather than relying only on historical accounts |
| Tax position, aged debtors and aged creditors | Whether there are cashflow or creditor issues behind the move | Explain anything unusual before the credit team has to ask |
| Security, guarantees and entity information | What the replacement lender can actually lend against and who is liable | Identify property, equipment, receivables or other security already tied to facilities, plus the borrower, guarantors and any releases that will be needed |
The point of the pack is not volume. It is to make the reason for the move independently verifiable on page one, then give the replacement lender the same financial and security evidence it would need for any refinance. If the outgoing letter does not actually say the decision was sector or policy based, do not describe it that way; ask the lender to state its position in writing.
Can they demand repayment now, or does your facility keep running?
It depends on which facility you are asking about, and the answer is genuinely different for a term loan and for an overdraft. That distinction is the most important thing on this page and almost nobody publishes it, because the letter you received does not draw it either.
A term loan generally keeps running on its own terms. An appetite withdrawal is a decision about writing new business, and it does not by itself end an agreement already on foot. What reaches you is your own contract at three specific points: the expiry date, any scheduled review, and any event of default or review event that lets the lender act early.
An overdraft is a different animal. The Victorian government's business guidance puts it plainly: bank loans usually have conditions of default under which the bank can demand payment if one or more conditions are breached, and overdrafts are at call, with the bank able to request repayment on demand. If your working capital sits in an overdraft or another at-call line, the protection you have is commercial and relational rather than contractual, and the honest answer is that the facility can be reduced or called without an event of default.
The same guidance carries the limb worth knowing: where a bank decides not to allow continuing default or escalation in borrowings, it must provide written advice that banking facilities have been withdrawn, and it will then ask that all monies be repaid. So a withdrawal of facilities is a written event, not a phone call, and the written notice is the document your next lender and your solicitor will both want.
Source: Business Victoria, dealing with your bank and loan default. Read 9 September 2026. This is general guidance on Australian bank lending practice, not a statement about any particular agreement.
If the letter itself says something about existing facilities, that statement governs and is worth having in writing. If it says nothing, the agreement governs. A recall or a demand is a different event with a different mechanism, and it is covered in our guide to a recalled facility. A transfer of the facility to another party is a third thing again, and it is answered further down this page.
None of that is a substitute for reading the document. If the wording of your expiry, review, at-call or default clauses is not obvious on a plain reading, that is a question for your solicitor with the agreement in hand, not one to settle from a search result.
Does a lending-sector exit affect your other banking products too?
Not automatically. A lender can stop writing new credit to an industry without closing every existing product the business has with it. Treat each facility or service as a separate contract unless the written notice expressly says otherwise.
| What you have | Does a lending-sector exit automatically end it? | What to check now |
|---|---|---|
| Term business loan | Usually not by itself; the existing contract governs | Expiry, review, default, variation and any specific wording in the lender's notice |
| Overdraft or at-call line | No automatic answer from the sector letter, but the facility can be repayable on demand under its own terms | At-call wording, current limit, next review and any written withdrawal or reduction notice |
| Equipment finance | Not merely because another lending product has closed to new business | The equipment facility's own expiry, default and cross-default provisions |
| Business credit card | Not necessarily | The card facility's limit, review and termination provisions, plus any separate notice |
| Transaction account | No. Closing banking services is a different event from withdrawing lending appetite | Whether the bank has separately said the account or banking relationship will be limited or closed |
| Merchant or payment facility | Not necessarily | Its separate terms and whether the provider has issued a termination or restriction notice |
| Guarantees and security | No. They do not disappear because the lender stops writing new business | What liabilities and security remain until the relevant facilities are repaid and formally discharged |
The practical mistake is to read one sentence about lending appetite as if it terminated an entire banking relationship. Ask the lender to list exactly which facilities and services are affected, and ask for the answer in writing.
What if your deal is still live, or you already have credit approved subject to conditions?
A live business-finance deal can still be affected by a lender's policy change, but there is no single stage called “approved” that has the same legal effect in every transaction. The answer depends on what has actually been issued, what remains conditional and what the approval, offer and facility documents say.
| Where the deal is | What you actually know | What to ask immediately |
|---|---|---|
| Application submitted | The lender is assessing the file; there is no basis to assume the transaction is committed | Is the application still being assessed, and under which version of the lender's policy? |
| Indicative or conditional approval | The approval still depends on the conditions and qualifications stated in it | Is the industry-policy change preventing final approval, or are already-lodged files being honoured? |
| Formal approval or offer issued | The written offer is stronger evidence, but its conditions, expiry and withdrawal wording still matter | Is the offer still on foot, and what conditions remain before the lender is bound to fund? |
| Facility agreement signed, conditions precedent outstanding | The documents now govern, including whatever must happen before drawdown | Which conditions precedent remain, and can the lender refuse drawdown under the agreement if policy has changed? |
| Settlement booked or first drawdown pending | Timing is critical, but a booking is not a substitute for the facility terms | Is settlement or drawdown still being honoured, and has anything changed in writing? |
Three questions close the uncertainty quickly. Ask whether applications already lodged are being honoured or withdrawn. Ask whether the decision applies only to new business lodged after a particular date. And ask for the answer in writing, because that is the difference between a file a replacement lender can pick up and a story it has to take on trust.
Costs already incurred are a separate issue. Valuation fees, lender legal costs, application charges or broker costs may still be payable depending on the documents under which they were incurred, even if the loan never settles. Do not assume either that the lender must absorb them or that you automatically owe them; read the fee authority, engagement, approval and facility documents.
The reassuring part is that the work is not wasted. The pack you assembled for the first lender is largely the pack the next one wants, and a deal that fell over on a documented policy change reads very differently to a credit team from a deal that failed credit assessment.
From our broking, indicative
What an appetite letter looks like when it lands is worth describing, because almost nobody publishes it and it is the first thing that tells you which problem you have.
- It is short, it is polite, and it is generic. It refers to a review of the lender's portfolio or its lending strategy, it thanks you for the relationship, and it says nothing at all about your trading, your accounts or your conduct. The absence of anything specific to you is the signal.
- The first question the next lender asks is not what happened, it is why. And the answer that fails is the assertion, delivered without paper, that nothing is wrong with us. A credit team cannot lend on a borrower's reassurance about their own file, so the answer has to arrive as evidence rather than as a claim.
- What stalls a clean file is almost never the borrower. It is the gap between the letter, which says nothing, and the story, which says nothing is wrong. Where the letter itself describes a policy decision, that gap closes on its own and the file reads differently from the first page.
- A file where the lender described a conduct problem reads as a conduct file until it is answered on its own terms, no matter how good the trading is. That is a different piece of work from this one, and it is the reason the distinction at the top of this section matters more than it sounds.
Indicative only, drawn from files we have placed, and current as at 9 September 2026. Not a quote and not an offer. Every lender reads a file differently and outcomes depend on lender policy and your circumstances at the time of application. General information only, not financial advice.
Why does a lender stop lending to a whole industry?
Because the decision is made at portfolio level, about what a class of loan costs the lender to hold and to service, rather than about the loans themselves. Three mechanisms do most of the work, and none of them requires anything to have gone wrong in the sector.
The word for what changed is credit appetite, which is simply the level and type of credit risk a lender is prepared to take, written down as internal policy. Nothing about it is secret or unusual. What surprises borrowers is that it moves by category, and that nothing obliges anyone to tell them it has moved.
| Mechanism | What actually changed | Does it say anything about your business? |
|---|---|---|
| The cost of holding the loan | Capital treatment. Banks hold capital against what they lend, and how much varies by the type of exposure, so a change in the rules changes how much of a class a lender wants to write | Nothing at all. It is a rule about the lender's balance sheet |
| The cost of serving the category | Compliance and onboarding cost, which lands on customer types rather than on individual customers. A lender can price it, resource it, or stop writing it | Nothing about your trading. It attaches to a category of customer or service |
| The shape of the book | Deal size, structure or geography. A lender can step back from small exposures, from lending into trusts and companies, or from a region, without mentioning industry at all | Nothing, and this is the version borrowers most often misread as being about their sector |
The cost of holding the loan
Banks hold capital against what they lend, and how much they hold varies by the type of exposure. The Reserve Bank of Australia records that capital changes effective from January 2023 lowered the risk weights on banks' loans to small and medium enterprises and revised the definition of retail small and medium enterprise exposures, which attract lower capital requirements, to include loan exposures of up to, but not including, $1.5 million. That is a capital rule about what it costs a bank to hold the loan, not a borrower eligibility rule. But it shows the shape of the lever: change the cost of holding a class of exposure and you change how much of it a lender wants to write.
The cost of serving the category
Compliance cost lands by category too, and it lands on customer types rather than on individual customers. The financial intelligence regulator records that changes to programme requirements and due diligence obligations for existing reporting entities started 31 March 2026 unless deferred under the transitional rules, and that a further group of businesses, including trust and company service providers, becomes regulated from 1 July 2026. When the cost of onboarding and monitoring a whole customer type rises, a lender can respond by pricing it, by resourcing it, or by declining to write any more of it. The third option is the cheapest and it is invisible from outside.
The internal instrument that records the decision
The instrument that carries all of this has a name: credit risk appetite. APRA's APS 220 Credit Risk Management requires an authorised deposit-taking institution to maintain a credit risk appetite statement and a credit risk management strategy. The standard goes further than the generic idea of “risk appetite”: the strategy must describe the institution's willingness to accept credit risk by exposure type, economic or industry sector, geographical location, currency and maturity.
APRA's accompanying APG 220 says internal limits are an important part of managing the portfolio and points specifically to limits on higher-risk borrowers, products and activities, particular industry sectors and geographies where appropriate. In other words, moving an industry up, down or out of appetite is not an improvised decision made after your application arrives; it is part of ordinary portfolio governance.
The broader CPS 220 Risk Management standard makes the board responsible for setting and approving the institution's risk appetite. Those prudential standards do not create a customer right to inspect the internal appetite statement or to receive notice every time an internal limit changes. Contractual notice, Banking Code commitments and any other customer-facing obligations are separate questions. Your practical warning system remains your own facility agreement, especially its expiry, review and covenant terms.
What the rulebook actually says
- Industry appetite is explicitAPS 220 requires an ADI's credit risk strategy to describe its willingness to accept credit risk by exposure type, economic or industry sector, geography, currency and maturity. APG 220 says prudent internal limits can be set on particular industry sectors and geographies.Sources: APRA, APS 220 Credit Risk Management, in force 1 January 2023; APRA, APG 220 Credit Risk Management. Read 9 September 2026.
- Board oversightCPS 220 requires an APRA-regulated institution to maintain a risk appetite statement and makes the board responsible for setting and approving that appetite. The prudential standard does not itself create a borrower right to inspect the internal statement.Source: APRA, CPS 220 Risk Management. Read 9 September 2026.
- Capital treatmentCapital changes effective from January 2023 lowered the risk weights on banks' loans to small and medium enterprises and revised the retail definition to include exposures of up to, but not including, $1.5 million. This is a rule about the cost of holding a loan, not a rule about who qualifies for one.Source: Reserve Bank of Australia Bulletin, Small Business Economic and Financial Conditions, 23 October 2025, endnote 7. Read 9 September 2026.
- How exposure is measuredIn credit data reported to the prudential regulator, small and medium enterprises are defined as businesses with annual revenue of less than $75 million, and smaller loans to them are loans where the lender's total exposure to the business is less than $1.5 million. This is a prudential reporting definition, not any lender's own cut-off and not an indication of what a lender will fund.Source: Reserve Bank of Australia Bulletin, Small Business Economic and Financial Conditions, 23 October 2025, endnote 5. Read 9 September 2026.
- Compliance obligationsAnti-money-laundering and counter-terrorism financing changes for existing reporting entities started 31 March 2026 unless deferred under the transitional rules, and further business types become regulated from 1 July 2026. Obligations attach to designated services and customer types, which is why cost can rise for a whole category at once.Source: AUSTRAC, About the reforms. Read 9 September 2026.
These are the rules lenders operate under. None of them tells you what any individual lender will do, and none of them is a statement about your business.
It happens by deal size and by location too, not only by industry
Industry is the version borrowers notice, because it feels personal. It is not the only cut. A lender can step back from exposures below a certain size, which is a real decision because small facilities carry much the same origination and monitoring cost as large ones. It can step back from a region by thinning the servicing that supports it. It can step back from a structure, such as lending into trusts and companies, without saying anything about the industries those structures trade in.
All three produce the same experience for the borrower and the same letter. If you are trying to work out which one you are in, the useful question is not what is wrong with my industry. It is what do I have in common with the other customers this lender is no longer writing. Size, structure, location and sector are all live answers.
Is your industry banned, or is it one lender's appetite?
There is no single government-mandated list of prohibited industries for lenders in Australia. Individual lenders maintain their own internal credit policies and restricted industry lists, and those are commercial documents. Credit policy itself is not published, it is not standardised, and it differs from one lender to the next, which is why a category that is closed at one lender can be routine business at another.
One qualification belongs with that, because it is the part most pages get wrong in both directions. Some institutions do publish sector positions, in sustainability or environmental and social risk statements and in payment and merchant provider exclusion lists. Those documents are real and they are worth reading. What they are not is a credit appetite list: they deal with reputationally sensitive industries rather than with the ordinary trading sectors most businesses operate in, so a manufacturer, a transport operator or a hospitality business will usually read one and find no mention of themselves at all. The published layer and the layer that has just affected you are two different documents.
That is worth stating plainly because the phrase people search for, a banned list, describes something that does not exist in that form. What does restrict lending across the whole market is narrower and more specific. Sanctions regimes prohibit dealings with listed persons and entities. Anti-money-laundering and counter-terrorism financing obligations attach to designated services and to particular customer types, and they can make some business genuinely unattractive to write. Those are real constraints, they are legal rather than commercial, and they are not what has happened to an ordinary trading business whose lender changed its mind.
The second thing worth separating is sector stress from sector exclusion. Some industries genuinely are having a harder year than others, and it is fair for a lender to notice. The Reserve Bank of Australia records that company insolvencies have risen in recent years, driven largely by small businesses with fewer than 20 employees, and that the share of companies entering insolvency is elevated in hospitality and construction. The same source carries the two limits that almost never travel with that figure when it is quoted: at an economy-wide level the insolvency rate is around its longer run average, and banks' loan books have been little affected by the rise because most insolvent businesses have little debt.
So a lender can be more careful about a sector without that sector being unfundable, and the market can be more careful about a sector while individual businesses inside it fund perfectly well. If you trade in one of those industries, the practical consequence is not that you should expect to be refused. It is that you should expect the file to be read more closely, and to be asked to show the things that separate your business from the average of its sector.
What does a public “restricted industry” document actually tell you?
It tells you what that document covers, not the lender's entire credit policy. The easiest way to misread the market is to find one public ESG, AML or payment-services document and treat it as a complete business-lending matrix.
| What you found | What it can tell you | What it cannot tell you |
|---|---|---|
| APRA credit-risk standards | Why regulated banks must set and govern credit appetite, including by industry sector | Whether your particular bank currently accepts your industry or your transaction |
| AUSTRAC higher-risk-sector guidance | How AML/CTF risk should be assessed and that higher sector risk does not itself require wholesale disengagement | Whether a lender must approve or renew business credit |
| Australian sanctions rules | Whether dealings with particular persons, entities, countries or activities are legally restricted | Whether an ordinary Australian trading industry fits a lender's commercial appetite |
| Bank ESG, sustainability or environmental and social policy | Activities or sectors the institution publicly restricts, conditions or monitors for environmental, social or reputational reasons | The institution's complete internal business-lending credit policy |
| Product-specific restricted-industry list | Whether that product or provider excludes a category | Whether every product at that institution, or every lender in Australia, excludes it |
| Merchant or payment-services exclusion list | Whether a payment service will support the activity | Whether the same institution will provide a business loan |
Primary-source anchors: APRA, APS 220 Credit Risk Management; AUSTRAC, higher-risk customers and debanking guidance; and Australian sanctions administered through the Commonwealth sanctions framework. Read 9 September 2026. Public lender policies are institution-specific and should be read only for the scope they actually state.
Is this the same as debanking?
Not necessarily. A lender stopping new credit to your industry and a financial institution withdrawing transaction, payment or other banking services are different events. One is a credit-appetite decision; the other is commonly described as debanking or derisking. Your letter may involve one, both or neither, so read what services it actually says are affected rather than assuming the entire banking relationship is ending.
AUSTRAC defines debanking in the context of financial institutions declining, withdrawing or limiting banking services to customers in certain sectors because of commercial considerations, reputational risk or regulatory risk exposure. It also draws a critical line: using a risk-based AML/CTF approach does not require disengagement from higher-risk customers, and there is no requirement in the AML/CTF Act or Rules to decline designated services to whole industry sectors merely because the sector carries higher relative risk.
That AUSTRAC guidance is about designated financial services and AML/CTF risk, not a rule requiring a lender to approve or renew business credit. Its value here is narrower but important: AML/CTF law does not itself create a blanket national banned-industry list. A financial institution can still make a commercial decision not to provide a service.
Source: AUSTRAC, Financial services for customers that financial institutions assess to be higher risk, last updated 23 April 2026. Read 9 September 2026.
Does a sector exit show up on your credit file?
The lender's decision to leave your industry does not itself create a credit enquiry or record a decline on your credit report. What can affect the file is applying for replacement credit repeatedly afterwards.
This matters because of what the searcher usually does at this point. Having been told that a lender no longer covers their sector, and half suspecting it is really about them, they apply to several lenders close together to find out. Formal applications can create credit enquiries, and repeated applications can make the next credit team ask whether the business is shopping under pressure. The letter may say nothing adverse about your business; the application pattern can still create a new question.
No credit reporting body and no lender publishes a number at which enquiries become a problem, and any page that quotes one has invented it or borrowed it from a foreign market. What is safe to say is directional: fewer, better-targeted applications read better than many speculative ones. Our read on how many credit enquiries is too many sets out what the bureaus actually publish, and what they do not.
The practical version is simple. Work out which lenders still cover your category before anything is lodged, rather than lodging in order to find out. That is the whole argument for treating this as a matching exercise, and it is why step five of the sequence above is worded the way it is.
Where your sector already has its own answer
Several sectors have specific machinery that sits over the top of all of this, and it is better answered in its own place than summarised here.
- Farm businesses have a statutory mediation framework in most states before enforcement, and whether it covers you depends on the state and on the security. That is set out in our guide to farm debt mediation.
- A construction facility part way through a build is a different problem again, because the exposure is unfinished. Construction funding stopped mid-build covers the sequence.
- Lending to a superannuation fund to hold business real property has its own rules and its own recent changes. See our guide to superannuation fund property lending and business real property.
Which protections actually reach you, and which do not?
Outside the banks, the Banking Code does not follow you automatically, but other protections can. Unfair contract terms law can apply to an eligible standard-form small-business contract, while AFCA can still be available where the lender is an AFCA member and the complaint falls within its jurisdiction. In practical terms, the Banking Code is subscriber-based, AFCA access is membership-and-jurisdiction based, and unfair contract terms protection is law-based. The three regimes also use different small-business boundaries, so the definition matters.
| Regime | Who it binds | How it defines a small business | What it actually gets you |
|---|---|---|---|
| Industry code of practice | Only the banks that subscribe to it. A lender outside the code is outside the code. | The code's own definition, which turns on staff numbers, turnover and total credit outstanding. The credit threshold has been under revision, so read the current code rather than a figure quoted on a blog. Check the version as well as the figure: several editions of the code are still in circulation online and the current instrument is the 2025 code, effective 28 February 2025. | Code commitments on how you are dealt with, including notice obligations and written confirmation of changed arrangements. |
| External dispute resolution | Financial firms that are members of the scheme. | An organisation with less than 100 employees, and the scheme cannot consider a complaint where a group of related companies has 100 employees or more. | A free, independent complaint path, subject to a jurisdictional limit: it cannot consider a complaint about a small business credit facility exceeding $6.3 million for complaints lodged on or after 1 January 2024, whether you are the borrower or a guarantor. |
| Unfair contract terms law | Anyone supplying financial products or services on a standard form contract, which includes lenders that are not banks. | A party employing fewer than 100 people at the time the contract is signed, or with turnover for the last income year of less than $10,000,000, and for financial products or services an upfront price payable under the contract not exceeding $5,000,000. | An unfair term is void and treated as if it never existed. A court decides. The regulator cannot declare a term unfair. |
Two corrections belong with that table, because both are commonly published the other way around. The $5,000,000 figure is the upfront price payable under the contract, which is not the same measure as the size of your loan, and a page that describes it as a loan-size cap has changed the test. And the employee count is a headcount rule with its own arithmetic: casual employees employed on a regular or systematic basis are counted, and part-time employees are counted as an appropriate fraction of a full-time equivalent.
Why the unfair terms limb matters at renewal in particular
The Australian Securities and Investments Commission explains that unfair terms in standard form contracts for financial products and services are illegal under the Australian Securities and Investments Commission Act, and that the law applies where the contract was entered into or renewed on or after 12 November 2016, or where a term in an existing contract was varied on or after that date. The word renewed is doing a lot of work. A business facility that rolls annually is being renewed, so a facility written long before that date can still be inside the regime today.
The regulator also names business loans as a kind of standard form contract small businesses commonly enter into, and carries the line almost nobody on this topic publishes: if a small business alleges that a contract is a standard form contract, the contract is presumed to be a standard form contract unless proven otherwise. That is a presumption about the character of the contract, not a presumption that any term in it is unfair, but it starts the argument in a much better place than most borrowers expect.
If a court does find a term unfair, the term is void and the contract continues to bind the parties if it can operate without it. A fine may be imposed on a provider that proposes, applies or relies on an unfair term, and each unfair term may attract a separate fine. The orders available include directing the provider to provide services to the affected small business at the provider's expense. All of that is court-determined, none of it is a prediction about your contract, and reading your own agreement against it is a job for your solicitor rather than for a web page.
What the complaint scheme will and will not look at
This is where the honest answer has two halves and the second half almost never gets published. The first half is a genuine limit: lending to a small business is not part of the responsible lending obligations under the National Consumer Credit Protection Act, so the Australian Financial Complaints Authority does not apply the responsible lending provisions, the National Credit Code or the responsible lending guidance when assessing a small business loan complaint, and there is no test of unsuitability for a small business loan.
The second half is the part that matters. The scheme states that when it reviews a small business lending complaint it looks at the obligations on small business lenders set out in statute, good industry practice and codes of practice, including the implied warranty that a service will be provided with due care and skill under the Australian Securities and Investments Commission Act, and statutory prohibitions on misleading and unconscionable conduct. So the absence of responsible lending is not the absence of standards. It is a different set of standards, aimed at conduct rather than at suitability.
What none of it does is compel a lender to keep lending to you. A commercial decision to stop writing a category is not, by itself, misconduct. The protections above govern how you are treated on the way out, what your contract is allowed to say, and what happens if a term goes too far. They do not create a right to a facility, and any page suggesting otherwise is selling you a fight you cannot win.
One practical entitlement is worth knowing because it is easy to invoke. The Australian Banking Association's financial assistance guidance states that where you and your bank agree a new arrangement for your loan, the bank will give you the changed arrangements in writing, including your new repayments and what happens at the end of the arrangement, and that if the bank cannot change your loan arrangement it needs to tell you why in writing. Asking for the position in writing is normal, it is expected, and it converts a phone call into something a new lender can read.
If you do think something has gone wrong rather than simply gone against you, there is a starting point most borrowers never find. The corporate regulator publishes a page specifically on disputes about commercial loans, which sets out where a business borrower takes a complaint about a commercial facility and what the regulator does and does not do with it. Read it before you write to anyone, because it will tell you quickly whether your complaint belongs with the lender's internal process, with the external complaints scheme, or with your solicitor.
ASIC also makes the membership point explicit: lenders that provide only commercial loans are not legally required to hold a consumer credit licence or to be AFCA members, although a commercial lender may join AFCA voluntarily. So “non-bank” is not the test. Check the actual lender against AFCA membership before you rely on having that complaint path.
Notice periods, discharge mechanics and the payout process are a separate question with a separate answer, and they are covered properly in our guide to a business facility that is not renewed rather than summarised here.
What happens if your facility is transferred to another lender?
Your obligation to repay survives a transfer, and what is genuinely open is which terms now govern, because two different legal mechanisms produce two different answers. The published answer to this question in Australia routinely fuses them, which is why borrowers end up with a confident explanation that cannot be correct.
The fusion is easy to spot once you know the shape of it. The circulating answer says that the incoming lender steps into the exact shoes of the outgoing one and must honour the original terms, and in the same breath says that your consent is usually not required. Those two statements describe different mechanisms. Stepping into the shoes, with the original contract ended and replaced, is a novation, and a novation needs everyone's consent. Transferring the benefit without your consent is an assignment, and an assignment leaves the original contract alone rather than replacing it. You cannot have both at once.
| The test | Assignment | Novation |
|---|---|---|
| What is transferred | Only intangible rights are transferred | Both rights and obligations are transferred |
| What happens to the original contract | The original contract remains unchanged | The original contract is terminated |
| Is a new document needed | It is not necessary to make a new contract | A new contract or a deed must be made |
| Is the original lender released | The assignor is not released from its obligations | The effect is to substitute one party for another, generally on the same terms |
| Is your consent required | At law there is no need to obtain consent from the other party, although many contracts include a clause requiring it | Consent must be obtained from all parties to the original contract |
| What the incoming party can do | The assignee does not become a party to the original contract, but can enforce the right to receive the assigned benefits | It is a tripartite agreement between the original parties and the new party, so the new party is a party to the contract |
Both columns are taken from the Australian Government Solicitor's legal briefing on novation and assignment of contracts, which is written for Commonwealth entities about their own contracting and is cited here for the general law of novation and assignment rather than as lending guidance. It was published on 19 May 2017, so treat it as a statement of principle and check the current position on anything that turns on it.
The practical follow-through is the part worth acting on. Many facility agreements already contain a clause under which you have agreed in advance to a transfer, sometimes described as standing consent or a pre-authorised novation. If yours does, then the consent question is already answered and arguing about it is wasted effort. If it does not, the mechanism available to your lender is narrower than it may have told you. Either way the answer is in your own agreement, not in a general rule, and it takes a solicitor about as long to read as it took you to find this page.
One thing this page will not tell you, because it is not true of a business facility, is that your original terms are legally protected or that a lender cannot change your pricing outside the rules of the contract. It is worth being specific about where that idea comes from, because you have probably just read it. Search the question and almost everything returned is American, written about United States home loans: that your loan terms cannot change when the loan is sold, that the new servicer cannot alter them, and that you must be notified a set number of days in advance. Those are United States mortgage servicing rules. They are not Australian law and they have nothing to say about an Australian business facility.
The same borrowing happens from the Australian consumer credit setting, and it is just as wrong here. Business-purpose lending sits outside that regime. What governs your interest rate, your review dates and your expiry is the facility agreement itself, which is exactly why the agreement is the document to read and exactly why a general answer cannot substitute for it. If what you are actually worried about is whether the facility can be called rather than transferred, that is answered earlier on this page and the answer differs by facility type.
What changes when your sector's funding moves outside the banks?
One lender can close your industry while the wider Australian business lending market remains competitive. The Reserve Bank of Australia's August 2026 Statement on Monetary Policy says business debt growth remains strong and relatively broad-based across industries, with business credit growth close to its fastest pace since 2022 alongside strong competition in the business lending market.
The latest Financial Aggregates sharpen that picture: business credit to non-financial businesses was 10.6 per cent higher over the year to July 2026. That is an economy-wide lending measure, not an approval rate and not evidence that any particular industry or borrower will obtain finance. Its value here is narrower: a decision by one lender to leave your category is not evidence that Australian business credit as a whole has closed.
Sources: Reserve Bank of Australia, Statement on Monetary Policy, August 2026, Financial Conditions; Reserve Bank of Australia, Financial Aggregates July 2026, released 31 August 2026. Read 9 September 2026.
The more granular small-business picture still matters. The RBA's October 2025 Bulletin on small business economic and financial conditions recorded improved access to finance on pricing, approval times, application processes and product range, alongside specialist and non-traditional lender growth, competition among traditional bank lenders and higher broker activity. It also recorded that some lenders had increased their own appetite for small and medium enterprise lending. So the aggregate market can loosen while a particular lender closes a sector. Both can be true at once.
| What you are comparing | Bank funding | Funding outside the banks |
|---|---|---|
| Where the money comes from | Largely retail deposits, alongside wholesale funding | Wholesale markets, securitisation and investor capital, which is why terms move with those markets |
| Prudential constraints | Prudentially regulated, with capital held against each exposure | Subject to fewer prudential regulatory constraints, and tends to lend to riskier borrowers |
| Who the lender is aimed at | Broad, with policy set centrally and applied by category | Often specialised by asset or sector, which is exactly why a category one lender exits is another lender's core book |
| Unfair contract terms law | Applies to standard form contracts | Can apply to eligible standard-form contracts; this is law-based rather than dependent on AFCA membership or Banking Code subscription |
| External dispute resolution | Available where the firm is a scheme member and you are inside the jurisdictional limits | Depends on the lender, so it is a question to ask before you sign rather than after |
| Industry code of practice | Applies where the bank subscribes | Does not apply |
| Where private credit plays | Not applicable | Provides some lending to small and medium enterprises, though it is more active in larger business lending |
Does changing the type of finance change which lenders will consider you?
Yes, it can, because lender appetite is often product-specific as well as industry-specific. A business that falls outside policy for an unsecured overdraft may face a different lender pool for equipment-backed finance, receivables finance or property-secured lending. That does not mean one structure is automatically easier, cheaper or better. It means the security, repayment source, purpose and facility type can change which credit policies are relevant.
The useful question is therefore not only “which lender still likes my industry?” It is “which lenders will consider this industry for this purpose, against this security, at this loan size?” That is a narrower matching exercise and usually produces a better shortlist than asking who lends to the sector in the abstract.
What the published numbers do and do not say
Two aggregates are worth carrying, both from the same source and both with their qualifiers attached, because they are routinely quoted without them.
The stock of outstanding loans to small and medium enterprises grew by around 6.5 per cent over the year to that report, driven almost entirely by growth in larger loans. Growth in smaller loans was around 3.5 per cent and has been very weak for several years. The central bank attaches two limits to that: the weak growth partly reflects measurement issues in the way smaller loans are defined, and lenders in liaison suggested it could also reflect subdued demand in a challenging economic environment. So it is evidence that the small end has been quiet, not evidence that the small end is being refused.
On security, the share of credit to small and medium enterprises that is unsecured has remained below 5 per cent in recent years, around half of small-sized loans are secured with assets other than residential property, and new loans secured with residential property are on average four-and-a-half times as large as loans secured on other assets. Those are market aggregates, not a statement about what any lender will require of you. They are useful for one thing: they explain why a conversation about security tends to be where a sector-exit refinance either works or does not.
What does not change
The mechanics of moving are the same as any other refinance. The facility has to be paid out, the security has to be dealt with, and the timing has to work. None of that is different because the reason for moving is a policy decision rather than a decline, and the shape of what is available on the other side is set out on our business loans page rather than repeated here.
Where the sector-exit case does differ is in the story the file tells, and it differs in your favour. A borrower who is moving because a category closed is not answering for anything. Related reads on the same shift: a commercial property loan after a bank decline, the non-bank shift in builder finance and a medical practice refinance from a bank to a non-bank.
Is a non-bank or private credit lender safe, and what should you check?
A non-bank or private credit lender is lawful and it is a normal part of the Australian credit market, but the protections around it are narrower than the ones you are used to, so safety here is something you check rather than something you assume. A government source states the counterweight plainly: the New South Wales Small Business Commissioner notes that alternative lenders may not offer the same level of consumer protections as traditional banks and other regulated financial institutions, that banks are subject to stricter oversight by the prudential regulator and are required to be members of the external complaints scheme, and that alternative lenders may also fall outside the Financial Claims Scheme.
That is not a reason to stay where you are, because staying is not on the menu when your lender has left your sector. It is a reason to ask six specific questions before you sign, and they are questions with checkable answers rather than matters of judgement.
What the primary sources say about lending outside the banks
- ProtectionsAlternative lenders may not offer the same level of consumer protections as traditional banks and other regulated financial institutions.Source: New South Wales Small Business Commissioner, non-bank and alternative lenders. Read 9 September 2026.
- OversightBanks are subject to stricter oversight by the Australian Prudential Regulation Authority and are required to be members of the Australian Financial Complaints Authority, and alternative lenders may fall outside the Financial Claims Scheme.Source: New South Wales Small Business Commissioner, non-bank and alternative lenders. Read 9 September 2026.
- Prudential positionNon-banks are subject to fewer prudential regulatory constraints than banks and tend to lend to riskier borrowers.Source: Reserve Bank of Australia Bulletin, Small Business Economic and Financial Conditions, 23 October 2025. Read 9 September 2026.
- Where private credit sitsPrivate credit firms provide some lending to small and medium enterprises, though they are more active in larger business lending.Source: Reserve Bank of Australia Bulletin, Small Business Economic and Financial Conditions, 23 October 2025. Read 9 September 2026.
These describe the sector, not any individual lender, and none of them says anything about whether a particular facility is right for your business.
Six questions worth asking before you sign
| What to ask | Why it matters | What a usable answer looks like |
|---|---|---|
| Is the lender a member of an external dispute resolution scheme? | It decides whether you have a free complaint path or a court | A yes or no, and the scheme named. It is checkable, so an answer that avoids the question is itself an answer |
| Is the contract a standard form contract? | If it is eligible, the unfair contract terms regime can reach it regardless of whether the lender is a bank; AFCA is a separate membership-and-jurisdiction question | If a small business alleges a contract is a standard form contract, it is presumed to be one unless proven otherwise, so the starting position is better than most borrowers expect |
| What happens at expiry, not at settlement? | Sector-exit borrowers get caught twice by not asking this. The review, expiry and renewal clauses decide whether you are back here at the next review | A clear statement of the expiry date, what triggers a review, and what the lender may do at one. Read these before you read the rate |
| Can the facility be transferred, and on what terms? | A transfer clause, a standing consent or a pre-authorised novation changes what can be done without asking you | The clause itself, pointed to in the document, and an explanation of what it permits. See assignment against novation above |
| Who actually funds it? | A lender funded from wholesale markets or investor capital behaves differently through a cycle from one funded by deposits | A straight answer. You are entitled to ask, and a lender that answers plainly is telling you something useful about itself |
| What happens if your business or industry falls outside policy later? | You are moving because this exact thing has already happened once, so the next review matters as much as today's approval | A clear explanation of the review and expiry process, what the lender may change, and what happens if it no longer wants the exposure. Compare that answer before you compare headline price |
None of that is exotic. It is the same due diligence any business does on a supplier it is about to depend on, applied to the one supplier most owners never diligence. If it helps to see the structures written out, our guide to how private lending works does that, and our read on non-bank commercial property loans covers the property side.
How do you avoid being back here at the next renewal?
You cannot guarantee that a lender will never change its industry policy again, but you can reduce how much damage the next change can cause. The practical controls are diversification, clear renewal terms and keeping the business continuously ready to refinance.
Three habits do most of the work. Read the expiry and review clauses before the rate, because a slightly dearer facility with a clear renewal path is worth more than a cheap one that puts you back in this position. Avoid concentrating every facility with one lender where the business can reasonably carry more than one relationship, because a single appetite decision then reaches everything at once. And keep the file continuously fundable rather than assembling it under pressure: current financials, a clean tax position and a tidy debtor ledger are what turn a forced move into an ordinary one.
Keep the letter, too. A borrower who can show that the last move was caused by a category decision rather than by assessment is telling a story the next credit team can verify, and that remains true years later.
An appetite withdrawal is a decision about what a lender wants in its credit portfolio, and APRA's credit-risk framework expressly allows appetite and limits to be managed by industry sector. That is not the same as a negative assessment of your business. A term facility generally keeps running under its own expiry, review and default terms, while an overdraft or another at-call line can be repayable on demand; other banking products must be checked separately rather than assumed to end with the lending decision. There is no single government-mandated banned-industry list every Australian lender follows, and AUSTRAC says AML/CTF rules do not themselves require whole-sector withdrawal from designated services. Outside the banks, the Banking Code does not automatically follow you, AFCA depends on membership and jurisdiction, and unfair contract terms protection is law-based. The cleanest refinance is one where the outgoing policy letter explains why you are moving and the rest of the pack proves the business remains fundable. Current RBA data also shows strong, broadly based business credit growth, so one lender closing a category is not the same thing as the Australian business-credit market closing.
Key takeaway: your industry is not banned, one lender's policy changed, and the work is matching rather than appealing.Frequently Asked Questions
A bank's decision is usually about what it wants to hold on its own balance sheet, not about the borrower in front of it, and the two look identical from the outside. A lender sets the risk it is prepared to carry at portfolio level, then writes that down as internal policy, and a whole industry or a whole loan size can fall outside it while every individual borrower inside it is still performing.
The Reserve Bank of Australia records that capital changes effective from January 2023 lowered the risk weights on banks' loans to small and medium enterprises and revised the retail definition to include exposures of up to, but not including, $1.5 million. That is a rule about what a loan costs a bank to hold, not a rule about who is eligible. If your file was declined on its own merits rather than on category, that is a different problem, and it is covered in our guide to a declined business loan.
If a court finds a term in a standard form contract unfair, the term is void, which the Australian Securities and Investments Commission explains means it is treated as if it had never existed, while the rest of the contract continues to bind the parties if it can operate without that term. A fine may be imposed on a financial services provider that proposes, applies or relies on an unfair term, and each unfair term in a contract may attract a separate fine.
Two limits travel with that. A court decides whether a term is unfair, and the regulator cannot declare a term unfair on its own. And the protection reaches the term, not the commercial decision behind it, so it can change what a lender is entitled to do to you at renewal without obliging any lender to keep lending. The regulator's information sheet on unfair contract term protections for small businesses sets out the regime.
For a business loan the relevant law is usually not the Australian Consumer Law but the equivalent regime in the Australian Securities and Investments Commission Act, which covers financial products and services, and that distinction matters because a loan is a financial product. The remedies are broadly the same in shape.
The regulator lists orders a court can make, including declaring all or part of a contract void, varying a contract, refusing to enforce terms, preventing the same or a substantially similar term from being used in future standard form contracts, requiring a provider to publish information, directing a provider to refund money or return property, and directing a provider to provide services to the affected small business at the provider's expense. The regulator's own page explains which protections reach which lender.
The honest answer for a small business is that private credit may not be aimed at you. The Reserve Bank of Australia records that private credit firms provide some lending to small and medium enterprises, though they are more active in larger business lending, so a page that presents private credit as the natural answer for a small business is describing a different market from the one you are standing in.
The New South Wales Small Business Commissioner adds the protection point, that alternative lenders may not offer the same level of consumer protections as traditional banks and other regulated financial institutions. Neither of those makes private credit wrong for a given file. They make it something to check rather than assume, and our guide to private lending sets out how the structure actually works.
Risk in this context is mostly a question of who is on the other side of your facility and what happens at expiry, not a single number, and anyone publishing a number for it on a page like this one is guessing. What can be said from a primary source is that non-banks are subject to fewer prudential regulatory constraints than banks and tend to lend to riskier borrowers, which the Reserve Bank of Australia states directly.
For a borrower the practical version is narrower. Ask who funds the facility, what the review and expiry terms say, and whether the lender is inside an external dispute resolution scheme. Those three answers tell you more about your own risk than any published sector figure. Our read on private lending after a bank declines a commercial deal covers the same ground from the property side.
Yes. Lending to a business is lawful and it is a normal part of the Australian credit market, and the Reserve Bank of Australia records that the non-bank share of lending to small and medium enterprises has increased strongly since the start of 2022, particularly for smaller loans. What differs is the regulatory perimeter, not legality.
Business-purpose lending sits outside the consumer credit regime, so the responsible lending obligations and the unsuitability test do not apply to it. That is why the checks in the section above matter, and why the six questions worth asking are the ones to work through before you sign rather than after.
Yes. A transfer changes who you pay, not whether you pay. Your obligation to repay survives the transfer, and the transfer alone is not a reason to stop paying, which is the single most expensive mistake available on this topic.
What is genuinely open is which terms now govern, and that depends on the mechanism used. The Australian Government Solicitor's briefing on novation and assignment sets out that an assignment transfers rights only and leaves the original contract unchanged, while a novation terminates the original contract and substitutes a party, requiring the consent of all parties. Your facility agreement decides which one was available, so read it, and take it to your solicitor if the answer is not obvious.
Your loan is an asset of the lender, so it does not simply disappear, and in practice it is transferred to another party who then stands in the lender's place for the purposes of collecting it. You continue to owe what you owe, and you would expect to be told in writing where to pay.
What happens to the terms is a contract question rather than a general rule. For an unregulated business facility there is no consumer credit protection sitting behind your interest rate or your renewal, so the position turns on what your own facility agreement says about transfer, variation and expiry. This is one to put in front of a solicitor with the agreement in hand, not to settle from a search result.
Yes, and a clean payment record is not evidence against it, because the decision is not made on your file. A lender sets the credit it is prepared to write at portfolio level, and a category can fall outside that even where every borrower in the category is performing.
The Australian Prudential Regulation Authority requires a regulated institution to maintain a board-approved risk appetite statement, and the board sets the appetite within which management operates. What the standard does not do is require the institution to tell you about it, or about a change to it. Your practical position is set by the facility you actually hold: a term loan runs to its own expiry and review terms, while an overdraft is at call and can be repaid on demand, and the section on whether they can demand repayment now sets out the difference.
There is no single government-mandated list of prohibited industries that every lender in Australia must follow. Individual lenders maintain internal credit policies and may also publish narrower ESG, sustainability, payment-service or sector positions.
AUSTRAC says the AML/CTF Act and Rules do not require financial institutions to decline designated services to whole industry sectors simply because the sector carries higher relative risk. Sanctions and other legal restrictions are narrower and specific. The practical consequence is that being outside one lender's policy tells you little about the next lender's appetite, which is why the decline matching problem is usually a matching exercise rather than an appeal.
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