Being declined by a bank isn't the end of your financing journey. Multiple alternative lending options exist for Australians who don't fit traditional bank criteria.
Why Do Banks Decline Loans?
Common Decline Reasons:
- Credit history (defaults, bankruptcy, late payments)
- Insufficient income documentation
- Self-employed less than 2 years
- Industry concerns (hospitality, retail)
- Property type (rural, unusual construction)
- Employment type (casual, contract)
- Too much existing debt
- Recent job changes
- Complex income structures
The reality: Banks have strict policies and can't assess individual circumstances beyond their criteria.
Alternative Lending Options When Banks Decline
1. Private Lenders
What: Individuals/companies lending against property security Rates: 7-18% p.a. Speed: 7-14 days Best for: Property equity, urgency, credit issues
Advantages: ✅ Focus on equity not credit ✅ Fast approval ✅ Flexible criteria ✅ Complex situations accepted
Disadvantages: Higher rates than banks Shorter terms (1-5 years typically) Higher fees
2. Non-Bank Lenders
What: Licensed lenders, not banks, but similar products Rates: 6-12% p.a. Speed: 2-4 weeks Best for: Near-bank criteria but with flexibility
Examples: Pepper Money, Liberty, Bluestone, FirstMac
Advantages: ✅ Better rates than private lenders ✅ Longer terms available ✅ More flexible than banks ✅ Still regulated
3. Specialist Lenders
What: Lenders focusing on specific niches Niches: SMSF, development, commercial, bad credit Rates: 7-14% p.a.
4. Peer-to-Peer Lending
What: Online platforms matching borrowers and investors Rates: 6-15% p.a. Best for: Smaller amounts, unsecured
5. Credit Unions
What: Member-owned financial cooperatives Rates: Similar to banks Best for: Banking alternatives, community focus
Decision Matrix: Which Alternative?
If bank declined due to:
Credit issues → Private lenders or specialist bad credit lenders Self-employed → Non-bank lenders or private lenders Property type → Private lenders Urgency → Private caveat or bridging lenders Near bank criteria → Non-bank lenders first Development/SMSF → Specialist lenders
Your Action Plan After Bank Decline
Step 1: Understand WHY (Day 1)
- Request formal decline reason from bank
- Get your credit report
- Identify specific barriers
Step 2: Assess Alternatives (Day 1-3)
- How urgent is your need?
- What security do you have?
- What's your budget for rates?
- Is this short or long-term?
Step 3: Target Right Lenders (Day 3-7)
- Match your situation to lender type
- Don't waste time with wrong lenders
- Get 3-5 quotes for comparison
Step 4: Prepare Better Application (Day 7-14)
- Address decline reasons in application
- Provide extra documentation
- Explain circumstances clearly
- Show exit strategy
Ready to explore alternatives after bank decline? Connect with alternative lenders who specialize in bank declines.