How Lenders Assess a Group of Companies and Trusts
Business Owners Finance
Connected entities · Control tests · Cross guarantees
If a lender has asked for accounts from companies or trusts that are not borrowing, wants every entity to sign, or has declined the file because of a related entity, this is why. Your accountant may have built the structure for tax or asset protection. The lender is deciding where the credit risk really sits, which entities depend on each other, and what can be reached if one part of the group fails.
Quick Answer
A lender treats your companies and trusts as one group when they share control, rely on each other's cash or would fail together. That changes what the lender asks for, who signs and how a weak entity reads across the file, not how much the rules let you borrow.
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What makes a lender treat your companies and trusts as one group?
Under APRA's large exposures standard, a bank treats counterparties as one connected group when a control relationship, economic interdependence or another connection makes them a single risk. Control can arise because one entity controls another or because both are controlled by the same third party. Economic interdependence is broader than one percentage test: APRA lists several ways distress in one entity can flow into another.
That is why common ownership matters, but it is not the only route. More than 50 per cent of voting rights is one clear control indicator. So are voting agreements and significant influence over a board or senior management. For economic dependence, 50 per cent or more of gross receipts or expenditure between two entities is one listed indicator, alongside shared repayment sources, guarantees that could sink the guarantor, irreplaceable trading relationships and circumstances where the default of one entity is likely to cause the other to default.
Three Australian frameworks then look at the same structure for different purposes. They should not be treated as three versions of the same test. APRA asks whether a bank should aggregate counterparties as one credit risk. AUSTRAC asks who ultimately owns or controls the customer for anti-money-laundering customer due diligence. AASB 10 asks whether an investor controls another entity for accounting consolidation. A structure can produce different answers under all three without any contradiction.
Scroll the table sideways to see every column.
| Framework | What question does it answer? | Key trigger | What it means on a loan file |
|---|---|---|---|
| APRA APS 221 | Should a bank treat counterparties as one connected credit risk? | Common control, economic interdependence or another connection that makes the counterparties a single risk. Common control includes two entities controlled by the same third party. | A bank aggregates the connected counterparties for large-exposure and concentration-risk purposes. The 50 per cent receipts or expenditure test is one economic-dependence indicator, not the whole definition. |
| AUSTRAC beneficial ownership and control | Which individual ultimately owns or controls the customer for customer due diligence? | An individual ultimately owning 25 per cent or more, directly or indirectly, or otherwise controlling the customer. Control can arise through voting power, board control or practical influence. | The lender follows the ownership and control chain and may ask for ASIC extracts, constitutions, trust deeds and other documents even when those entities are not borrowing. |
| AASB 10 | Should an investor consolidate another entity in its financial statements? | Power over the investee, exposure or rights to variable returns, and the ability to use that power to affect those returns. | The accounting group can differ from the lender's credit group. Consolidation does not itself decide which entities a lender will assess or require to guarantee. |
Sources read at source on 22 September 2026: APRA Prudential Standard APS 221 Large Exposures, in force 1 January 2023, especially paragraphs 21 to 24; AUSTRAC, determining ownership and control structures; and AASB 10 Consolidated Financial Statements, especially paragraphs 5 to 8. These frameworks answer different legal, prudential and accounting questions.
Read across, the practical point is simple. The same structure can form one credit group for a bank, a separate beneficial-owner chain for identity checks, and a different accounting group in the financial statements. That is why a company structure designed for tax or asset protection can still be read across on a credit application.
A trading company runs the business. A corporate trustee holds the premises for a property trust, and the trust's rent comes from the trading company. The legal entities are separate, but the cash flow is not. If the trading company stops paying rent, the trust's debt cover disappears at the same time. That is the type of economic interdependence that makes a lender ask for the trading accounts even when the application is in the trustee's name. The security side is covered separately in property held in a trust or company as security.
Two companies have the same shareholders and directors, but the ownership percentages do not produce a simple majority for one individual. That does not end the enquiry. A bank can still look at voting arrangements, who actually directs policy, common control through another entity, economic dependence and any other relationship that makes the companies a single risk. The answer comes from the whole structure, not one percentage on an ASIC extract.
Why is the lender asking about entities that are not on your application?
Because the lender cannot assess the applicant until it knows where the risk actually ends. A bank has to decide whether the applicant belongs to a group of connected counterparties. A lender that is a reporting entity under the anti-money-laundering regime also has to identify the people who ultimately own or control the customer. And any lender assessing serviceability needs to know whether the applicant's income, expenses, guarantees or repayment sources depend on another entity.
That is why the lender may ask for accounts from a company that is not borrowing, a trust deed for a trust that owns no security in this deal, or details of an old company you consider dormant. The question is not only who is on the application. It is what could weaken the borrower, divert its cash flow or become liable if the facility goes wrong.
What if one related entity has tax debt, losses or overdue lodgements?
It can affect the application even when that entity is not the borrower. The effect depends on why the entities are connected, whether the problem can drain cash from the applicant, whether a director is exposed personally, and the lender's policy. A disclosed issue with a documented explanation is easier to assess than the same issue discovered halfway through credit.
A builder applies through a trading company with clean accounts. An older company under the same owner still has a tax debt on a payment arrangement and overdue lodgements. The older company is not borrowing, but it becomes relevant because the lender needs to understand common control, any director exposure, whether cash is moving between the companies and whether the old company can create a claim on the borrower. If a bank has already said no on something like this, see whether a broker can help after the bank declined.
The ATO can disclose a business tax debt to credit reporting bureaus where the business has an ABN, at least $100,000 is overdue by more than 90 days, the business is not engaging with the ATO to manage the debt, and the other statutory criteria are met. The ATO says it will not report the debt if the business is already engaging with it to manage the tax debt. A payment arrangement therefore matters, but it is evidence of engagement, not a clean bill of health for a credit application.
Expect a lender that cares about the related entity to ask for the current ATO balance, the payment-arrangement terms, evidence the arrangement is being met, whether current BAS and tax obligations are being lodged and paid, why the debt arose, and whether the group can service both the ATO commitment and the proposed finance. If the borrower or a common director is regularly supporting the tax-debt entity, show that cash movement rather than treating the entity as isolated.
ATO, disclosure of business tax debts, current criteria read 22 September 2026. The ATO states that at least $100,000 must be overdue by more than 90 days and that a business already engaging with the ATO to manage its tax debts will not be reported.
Do intercompany loans and unpaid trust distributions matter to the lender?
Yes, because related-party balances tell the lender where cash has moved and which entity may depend on another, but the legal and tax character of each balance must be checked rather than assumed. Ask your accountant to reconcile intercompany loans, shareholder or director loan accounts, trust distributions, management fees, rent and guarantees before the application so the lender is not trying to reverse-engineer them from several balance sheets.
That distinction matters after the High Court's June 2026 decision in Commissioner of Taxation v Bendel. On the particular trust resolutions before the Court, the unpaid present entitlements were held on separate trusts and no debtor-creditor relationship arose, so the Court rejected the Commissioner's argument that the unpaid entitlement itself was a Division 7A loan. Do not label every unpaid trust distribution a loan. The decision also does not turn every related-party balance into harmless equity or make Division 7A irrelevant to other transactions.
For the credit file, reconcile the balance on both entities' accounts and identify what it actually is: an enforceable loan, a director or shareholder loan account, an unpaid trust entitlement, a management-fee balance, rent, a contribution or another arrangement. Then document the terms, whether it is repayable on demand or under an agreement, whether interest is charged, whether repayments are occurring, and whether one entity depends on the balance being left outstanding. A lender may care about collectability, liquidity and dependence even where the tax label is not "Division 7A loan".
High Court of Australia, Commissioner of Taxation v Bendel [2026] HCA 18, judgment 10 June 2026; and ATO, Bendel case decision impact statement, both read 22 September 2026. Tax and trust-law characterisation is for your accountant and solicitor; the lender's concern is how the balance affects cash flow, liabilities and dependence between entities.
From our broking, indicative
What we see on applications with more than one entity in them, as at September 2026.
- In our experience, lenders look at each related entity for lodged returns, overdue tax, losses or negative equity, balances owed between entities, guarantees already given and security already held.
- The most common reason we see a multi-entity file stall is not credit. The entities were set up at different times, often by different advisers, and nobody has one current picture of who owns, controls and funds what.
- The questions that surprise people are rarely about the trading company. They are about the dormant entity nobody has thought about since it was registered, especially one still carrying tax debt or an old guarantee.
- We plan document gathering for a group in weeks rather than as one request, because deeds, extracts and signed accounts usually sit with different advisers.
Indicative only, based on deals Switchboard has placed, as at September 2026. This is not a quote, not an offer and not an indication of approval. What a lender asks for, and where it draws the boundary around your entities, depends on that lender's policy and your circumstances at the time of application. Not financial advice.
What documents will a lender ask for across a group of companies and trusts?
Expect the lender to ask for documents that prove three things: who owns and controls each entity, whether each entity has legal authority to borrow or guarantee, and how money and liabilities move through the group. The exact list varies by lender, but a clean multi-entity application usually needs more than the applicant's latest financial statements.
Build one group pack before the lender asks
- One-page structure map. List every company and trust, ABN or ACN, shareholders or unitholders, directors, trustee, appointor or principal where relevant, and which entity actually trades.
- Constitutional documents. Trust deed and every variation, company constitution where relevant, trustee changes and resolutions that affect authority.
- Current entity records. ASIC company extracts showing directors and shareholders, plus any ownership records needed to follow the chain to the ultimate owners and controllers.
- Financial evidence. Latest financial statements and tax returns for each relevant trading or asset-holding entity, BAS or management accounts where current trading needs to be shown, and bank statements where the lender requires them.
- ATO position. Tax debt balances, payment-plan evidence, overdue lodgements and any notice of intent to disclose a business tax debt.
- Related-party schedule. Intercompany loans, director or shareholder loan accounts, trust distributions, management fees, rent, guarantees, indemnities and any security one entity has given for another.
- Existing debt and security. Facility limits, balances, repayment terms, mortgages, PPSA security and which entity or person guarantees each facility.
Ask your accountant for the accounting pack and your solicitor for the governing documents. The broker should reconcile both against the proposed borrower and security structure before the application is lodged.
Why does the lender need the trust deed if the trust is not borrowing?
Because the deed may answer whether the trustee can guarantee another entity's debt, mortgage trust property, distribute income to the proposed borrower or otherwise support the transaction. A trust that is not the borrower can still be central to the credit decision if it owns the security, receives income from the trading entity or is being asked to guarantee.
Find every deed of variation as well as the original trust deed. A lender's solicitor can hold settlement until the power to borrow, mortgage or guarantee is clear. The security-specific checks are set out in using company or trust property as security.
Why does the lender need accounts for a company that is not borrowing?
Because the accounts can show losses, tax debt, related-party balances, guarantees, rent, management fees or other dependencies that affect the applicant. A lender is not collecting documents for their own sake. Each request should answer a credit question: who controls the group, where cash comes from, where it goes, and what can create a claim on the borrower.
AUSTRAC's ownership and control guidance lists ASIC records, constitutions and trust deeds among documents used to establish ownership and control. Read 22 September 2026.
Does being a beneficial owner, beneficiary or shareholder mean you have to guarantee the loan?
No. Being identified for ownership or control is not the same thing as agreeing to be a guarantor. AUSTRAC customer due diligence can require a lender to identify individuals who own or control a company or trust, including trustees and other people with control over a trust. The lender's credit policy and the finance documents separately determine who, if anyone, must give a guarantee.
A person can therefore be relevant to AML identification without becoming liable for the debt, while another person or entity can become liable because they actually sign a guarantee or give security. Keep those questions separate when reading a lender request: who must be identified?, who must sign the facility?, who must guarantee?, and whose assets secure the debt?
AUSTRAC, initial customer due diligence for trusts and ownership and control structures, read 22 September 2026.
What changes when a lender groups your companies and trusts?
Grouping changes the unit of assessment. Instead of reading the applicant in isolation, the lender looks at the connected entities together to understand cash flow, liabilities, guarantees, security and concentration risk. A weak entity can therefore create questions for a strong one even when the weak entity is not borrowing under the new facility.
Grouping does not automatically mean every company or trust must become a borrower, guarantor or security provider. Those are separate credit and legal decisions. A lender may still ask for a cross guarantee, personal guarantees or shared security, but the documents have to be read on their own terms. Do not treat "the lender grouped us" and "every entity is legally liable" as the same statement.
Do APRA's 10 per cent and 25 per cent limits cap how much your group can borrow?
No. Under the APS 221 standard in force on 22 September 2026, a large exposure starts at 10 per cent of an ADI's Tier 1 Capital and the general large-exposure limit to one counterparty or connected group is 25 per cent of the ADI's Tier 1 Capital. Those percentages constrain the bank's concentration exposure relative to its own capital. They are not an LVR, serviceability rule or maximum facility size for your group.
APRA, Prudential Standard APS 221 Large Exposures, in force 1 January 2023, read 22 September 2026. The current standard defines a large exposure at 10 per cent of Tier 1 Capital and the general limit at 25 per cent of Tier 1 Capital.
Have the rules changed in 2026, and what changes in 2027?
Two APRA changes are worth separating. Since 1 February 2026, APRA-regulated banks have been subject to a limit under which no more than 20 per cent of new owner-occupied mortgage lending and no more than 20 per cent of new investment mortgage lending may be at a debt-to-income ratio of six times or more. That applies to in-scope residential mortgage lending, not to every business loan made to a company or trust. If your group is borrowing for residential property, it can affect bank appetite even though it is not a personal borrowing cap. How the cap reads on a self-employed application is covered in the debt-to-income cap and one doc home loans, and the separate 2026 tax changes to trusts are in what the 2026 trust changes mean for property borrowing.
From 1 January 2027, a revised APS 221 is scheduled to commence. It keeps the 10 per cent large-exposure threshold and 25 per cent general limit but measures them against Common Equity Tier 1 Capital rather than Tier 1 Capital. The connected-counterparty concept remains: control, economic interdependence and other connections can still make counterparties one risk.
APRA, activating debt-to-income limits as a macroprudential policy tool, effective 1 February 2026; and APRA Prudential Handbook, APS 221 final not yet in force, commencing 1 January 2027. Both read 22 September 2026.
For most self-employed groups, the practical constraint will still be the lender's credit policy, serviceability, security position and appetite for the structure rather than the prudential percentage itself. Where several facilities are spread across lenders, the next question is usually whether to consolidate or split lender exposure, not how to calculate the bank's regulatory capital.
Do non-bank lenders read your group of companies and trusts the same way?
No. A non-bank lender is not applying APS 221 in the way an APRA-regulated bank does, so the prudential connected-counterparty rule is not the source of its grouping decision. But a non-bank can still assess the same entities together under its own credit policy when cash flow, guarantees, ownership or security connect them, and a reporting entity still has anti-money-laundering customer due diligence obligations.
The important distinction is different rulebook, not no group assessment. The Reserve Bank noted in 2026 that non-banks are subject to fewer prudential regulatory constraints than banks and have expanded their share of business credit, while liaison suggested only modest recent easing in lending standards overall. That can create different appetite for self-employed, property and more complex business borrowers, but it is not a promise that a non-bank will ignore a weak related entity.
Reserve Bank of Australia, Recent Changes in Credit Markets and Their Implications for Monetary Policy, February 2026; and Financial Stability Review, March 2026. Read 22 September 2026.
The guarantor position also differs. The 2025 Banking Code of Practice binds subscribing banks and Part B6 is framed around an individual Guarantor. A company signing a cross guarantee is therefore generally outside those Part B6 process protections. That does not mean a corporate guarantee is otherwise unregulated or that no other legal protections can apply. It means the Banking Code's individual-guarantor process is not the source of protection for that company.
Australian Banking Association, 2025 Banking Code of Practice, read 22 September 2026. The Code applies to subscribing banks and defines a Guarantor for Part B6 as an individual who guarantees a loan to another individual or Small Business to which the Code applies.
Can another lender treat one related entity as separate after a decline?
Sometimes, but not because the entity has been renamed or left off the next application. Another lender may have a different servicing, security or guarantor policy and may be willing to treat an entity as self-supporting or outside the borrowing group where the evidence supports that view. The underlying debt, legal ownership, guarantees and cash movements do not disappear when you change lenders.
To argue that an entity genuinely stands on its own, be ready to show its separate income and expenses, how its debt is serviced, whether it receives recurring support from the applicant, whether there are cross-guarantees or shared security, and whether related-party transactions are documented rather than informal. If the first decline was caused by a real cash-flow shortfall or an enforceable guarantee, changing lenders may not change the answer. If it was caused by lender-specific policy, another lender can legitimately reach a different credit decision.
For the borrower, the useful question is not simply bank versus non-bank. It is which lender will accept this exact combination of entities, income, security, guarantees and time pressure, and at what total cost and legal reach? Business lending and commercial property lending cover the broader bank and non-bank routes, while private lending is relevant where timing, structure or an unresolved related-entity issue rules out mainstream credit.
What does a cross guarantee actually do, and which document is it?
A lender's cross guarantee makes the signing entities liable to that lender for obligations covered by the guarantee, so one entity's default can expose another signing entity and any security it has given. A deed of cross guarantee used for ASIC financial reporting relief is a different document, with a different purpose, different beneficiaries and different trigger.
The shared name causes avoidable confusion. Before anyone says "the group has a cross guarantee", ask which one.
Scroll the table sideways to see every column.
| Question | ASIC deed of cross guarantee | A lender's cross guarantee |
|---|---|---|
| Why it exists | To support financial reporting relief for eligible wholly-owned companies that satisfy the instrument's conditions | To secure obligations owed to the lender under the facility documents |
| Who benefits | Creditors of companies inside the deed group, under the deed terms | The lender taking the guarantee |
| When it matters | Its creditor-liability mechanism is tied to winding up and the deed terms | When an obligation covered by the guarantee is enforceable, commonly following default |
| Where it sits | Lodged with ASIC as part of the reporting-relief framework | Signed with the finance documents |
| What the lender checks | Whether the group is party to the deed and what contingent obligations run across the closed group | Which entities guarantee, what obligations are covered, any cap, what security supports it and how release works |
ASIC, relief for wholly-owned entities and ASIC Information Sheet 24, read 22 September 2026. ASIC describes the deed group as akin to a single legal entity in many respects for the reporting-relief framework.
A lender's guarantee is the document that can change the practical risk of a group most dramatically. One entity may never receive loan proceeds but can still become liable because it signed. That is why the important questions are not only "what is the interest rate?" but also "which entity signs, what debt is covered, what assets sit behind it, and how does the entity get released?"
A guarantee can also reinforce the bank's view that two entities are economically connected. APS 221 lists a guarantee as one indicator where a claim would be significant enough that the guarantor is likely to default. It is one indicator among several, not an automatic rule that every guarantee creates one connected group.
Does resigning as a director or transferring shares release a personal guarantee?
No, not by itself. Resigning or selling your shares changes your role in the company; it does not rewrite a guarantee you already signed. Release depends on the guarantee's terms and on the lender agreeing to a discharge, a replacement guarantor or a refinance, and the lender may reassess the remaining borrower, guarantors and security before it agrees. Get the release in writing rather than relying on the ASIC change. The full release process is covered in director's guarantees and how to get released.
Nevile & Co., exiting a 50/50 company and personal guarantees, read 22 September 2026, on the practical need for lender agreement or a refinance when a departing owner seeks release. General information only; the actual guarantee controls.
Questions to put to your solicitor before the group signs
- Does each entity have power to give the guarantee? For a trustee, check the trust deed and every variation. Borrowing power and power to guarantee somebody else's debt are not always the same clause.
- Which entities are signing, and what do they own? A separate asset-holding entity may be pulled into a trading-company facility if it signs broadly.
- Is liability capped? Ask whether the guarantee is limited to a stated amount or extends to all money covered by the document, including future facilities.
- What security supports it? A guarantee and a mortgage or PPSA security interest are different documents but can work together.
- What events trigger enforcement? Read the default and cross-default provisions, not just the signature page.
- How does release work? Ask what must happen if an entity is sold, refinanced, wound up or is meant to leave the group.
General information, not legal advice. Get independent legal advice before any entity signs a guarantee.
The mechanics of getting out of a guarantee are covered in director's guarantees and how to get released. If the structure was built to keep property away from trading risk, also read what happens when one entity gives security for another entity's debt before accepting a group-wide guarantee package.
What should you do before you apply with more than one entity?
Build the group map first, fix the document gaps second, then choose the lender. Do not submit a clean applicant and hope the rest of the structure stays invisible. The lender is likely to find the related entities anyway, and a file that changes shape during assessment is harder to approve than a complex file that was explained accurately from the start.
Before you apply, in this order
- Draw the group on one page. Include every company and trust, who controls it, who owns it, what it owns and what it does.
- Reconcile the money between entities. Match related-party balances across both sides of the accounts and explain rent, management fees, trust distributions, director loans and intercompany loans.
- Check every problem entity. Tax debt, overdue lodgements, losses, negative equity, statutory demands, guarantees and old facilities should be known before submission.
- Read the governing documents. Confirm the proposed borrower, trustee, guarantor and security provider actually have power to do what the finance structure requires.
- Map every existing guarantee and security interest. Know what the current lenders can already reach before adding another facility.
- Write the explanation before credit asks for it. One paragraph per issue, with the supporting document attached.
- Choose the lender for the whole structure. Compare bank, non-bank and private options on total cost, documentation, guarantee reach, security, covenant requirements and exit, not rate alone.
A complicated group can still be a straightforward credit story when the ownership, cash flow, liabilities and security can be followed without guesswork.
What usually happens next
- The bank declined because of another entityWork out whether the issue is lender policy, evidence or a real credit problem before applying again
- A related entity has ATO debtSee how an ATO debt can be documented and paid out at settlement
- The lender wants trust property for another entity's loanCheck the deed, trustee authority and security consequences first
- You are leaving a company or want one entity released from a guaranteeDo not assume resignation or a share transfer ends liability; understand the lender release process
- Your properties are already tied togetherSee how to get off cross-collateralisation before the next refinance
- You are adding another trust to increase capacityCheck whether a separate trust actually changes lender servicing
- The group has several lenders and facilitiesCompare consolidation with splitting lender exposure
- The deal cannot wait for a mainstream credit processUnderstand when private lending can bridge the structure or timing problem and what the exit needs to be
Do not apply to several lenders before you know which issue caused the first problem. Repeated applications can create more work without changing the underlying credit story.
A bank can group companies and trusts because of common control, economic interdependence or another connection that makes them one risk. That is broader than a 50 per cent revenue test and broader than the entity named on the application. AUSTRAC's beneficial-owner rules and AASB 10 accounting control use different tests for different purposes, so the same structure can have three different boundaries. Once entities are read together, the lender may ask for deeds, extracts, accounts, tax positions, related-party balances, guarantees and existing security across the group. The APRA 10 per cent and 25 per cent large-exposure figures constrain the bank's own capital exposure, not the amount your group is allowed to borrow. A lender's cross guarantee is also different from the ASIC deed used for financial reporting relief. The cleanest application is the one where ownership, cash flow, liabilities, guarantees and security can all be followed before credit asks the first question.
Key takeaway: the lender is trying to find the real boundary of risk. Map the whole group, reconcile the money between entities and understand every guarantee before you choose the lender.Frequently asked questions
A deed of cross guarantee is a deed that wholly-owned companies in a group sign so they can be relieved of preparing and lodging their own audited financial reports. In return, each company that is party to it becomes liable for the debts of the others to their creditors if one of them is wound up, which is why ASIC describes the deed group as akin to a single legal entity in many respects. It is a different document from a cross guarantee your lender asks the group to sign, as the comparison table above shows. The instrument it sits under, ASIC Instrument 2016/785, is due to expire on 1 October 2026 and ASIC has consulted on remaking it for five years, so check the current instrument if you are reading this after that date.
It can, where the entities are connected by control, cash flow, guarantees or another relationship that makes the problem relevant to the applicant. A tax debt or overdue lodgement in a related entity is not an automatic decline, but the lender may ask whether it can drain cash from the borrower, create director exposure or indicate a wider compliance problem. The ATO can report a business tax debt where at least $100,000 is overdue by more than 90 days and the business is not engaging with the ATO to manage it. What a lender accepts depends on policy and the explanation supported by documents. The questions a lender asks about a related entity are set out in why the lender asks about entities that are not on your application, and clearing the debt through a refinance is covered in how an ATO debt gets paid out at settlement.
Make that decision with independent legal advice before the finance documents are due to be signed. Check which entities are signing, whether each trust or company has authority to guarantee, what debt is covered, whether liability is capped, what security supports the guarantee, what events trigger enforcement and what is required for release. A group guarantee can expose an entity that never receives the loan proceeds, so the legal reach matters as much as the price of the facility. The questions to take to your solicitor are in the cross guarantee section above, and the wording that extends a guarantee to future debt is explained in the all monies clause.
The Part B6 guarantee process in the 2025 Banking Code of Practice is framed around an individual Guarantor and binds subscribing banks. A company or corporate trustee signing a cross guarantee is therefore generally outside those Part B6 protections, and a non-bank that is not a Code subscriber is not bound by the Code. That does not mean a corporate guarantee is otherwise unregulated or has no legal protections. Obtain independent legal advice on the actual guarantee and security documents before signing. How a personal guarantee works and how release happens is covered in director's guarantees and how to get released.
Not to every loan made to a trust or company. Since 1 February 2026, APRA has limited each ADI so that no more than 20 per cent of new owner-occupied mortgage lending and no more than 20 per cent of new investment mortgage lending is at a debt-to-income ratio of six times or more. The policy applies to in-scope residential mortgage lending, not to every business facility. It constrains the bank's new lending mix rather than setting a personal borrowing cap for a trust or company. How the cap reads on a self-employed application is covered in the debt-to-income cap and one doc home loans.
Usually, if the other entities are relevant to ownership, control, cash flow, guarantees, security or the lender's connected-risk assessment. The lender may therefore ask for information about an entity that is not borrowing. Provide the structure map, deeds, extracts and accounts up front where they are relevant so the lender can see why the entity is or is not part of the credit risk. The security side is covered in property held in a trust or company as security.
No. Creating another company or trust does not create extra income or erase existing commitments. A lender may treat some entities or debts differently under its own servicing policy, including where an entity is genuinely self-supporting, but that is a policy decision about how income and debt are counted rather than new borrowing capacity created by the entity itself. The structure can change ownership, tax and security; serviceability still depends on the income and commitments the lender accepts. How lenders count trust debt against you is explained in how lenders assess trust income and borrowing capacity, and the one-trust-per-property idea is tested in whether a separate trust per property resets borrowing capacity.
No. A non-bank is not applying APS 221 in the way an APRA-regulated bank does, but it can still assess related entities together under its own credit policy and it may still have anti-money-laundering customer due diligence obligations. Non-banks can have different appetite for complex structures, but they do not automatically ignore a weak related entity. The Banking Code also binds subscribing banks rather than non-banks generally, so guarantee-process protections can differ. Both limbs are set out in the non-bank section above, and private lending covers when that route fits.
Expect a structure map, trust deeds and variations, relevant company constitutions and ASIC extracts, current financial statements and tax returns for the entities the lender needs to assess, ATO debt or payment-plan evidence, and a schedule of related-party loans, distributions, guarantees and existing security. The lender is trying to establish who owns and controls the entities, whether they have authority to sign, where cash moves and what liabilities can flow across the group. The trust-specific pack is set out in what documents a lender needs for a company or trust.
It depends on what was signed. Without guarantees or shared security, a default sits with the borrowing entity and whoever guaranteed that facility. Where the group has signed a lender's cross guarantee, the lender can look to the other signing entities for the defaulting entity's obligations, and any security they gave can be called on. Where a deed of cross guarantee is in place, the other parties also become liable to creditors if a party is wound up. And where facilities are cross-collateralised, one default can reach assets that were never part of that deal, which is why getting off cross-collateralisation is worth doing before it matters rather than after. The difference between a lender's guarantee and the ASIC deed is set out in the cross guarantee section above.
Another lender can apply different credit policy, so it may treat a genuinely self-supporting or separate entity differently. It cannot make real liabilities, guarantees, shared security or cash dependence disappear. Show how the entity services its own debt, whether it receives support from the applicant, what guarantees link it to the group and why the first lender declined. A lender-policy decline can produce a different result elsewhere; a real cash-flow or legal-obligation problem usually has to be solved rather than relabelled. What a broker can and cannot change after a decline is covered in whether a broker can help after the bank declined.
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