When the bank will not refinance and the facility is due

A business facility with an expiry date becomes repayable in full on that date, and a bank that declines to extend it is exercising a right in the contract rather than making a finding about the business. Under the Banking Code of Practice a subscribing bank must tell a small business at least three months before the money falls due that it has decided not to extend.

What the date on the facility actually is

Three different dates get described as the loan being due, and they are not the same problem. A term facility has an expiry date: the principal is repayable in full when the term ends, which comes as a shock mainly where the repayments have been interest-only and nothing has been coming off the balance. A facility with an annual review date continues, but the bank reassesses it each year and can decline to carry on. An overdraft or line of credit is often repayable on demand, which means the bank does not need a date at all. The facility agreement says which of the three you have, and that is the document to read before anything else.

It is worth knowing why the agreement matters so much here. Credit taken wholly for business purposes sits outside the National Consumer Credit Protection Act 2009 (the NCCP Act), which covers lending for personal, domestic and household purposes. A business borrower's rights in this situation come from the contract that was signed and from the Banking Code of Practice where the lender subscribes to it — not from the consumer protections people assume are there. The clause that governs the end of the facility is usually shorter and blunter than expected, and it is normally two pages from the back.

What a decision not to extend is not: a verdict on the business. Banks exit facilities because appetite for an industry or a security type has changed, because a covenant has moved on paper, because a review date arrived, or because a decision was made about a portfolio several levels above the person who rang you. A business that has paid every instalment on time for years can still be told the facility will not be renewed.

You are not the first one this week

Most owners in this position ask another bank next, and the answer is often the same. It is rarely about whether the loan would be repaid: the last financials are out of date, a lodgement is late, the credit file has a mark on it, or there is simply not enough time left to put a full application through a credit queue. Those are the things a bank exists to care about. None of them says anything about whether there is equity in the property.

That gap is where HomeSec has been since 2004. We are not here to judge how the facility got to its last few weeks; we have seen enough of these that it does not surprise us. What we look at is whether there is enough unused equity in Australian real property and whether the purpose is a genuine business one — from $20,000 to $5,000,000, with no financial statements, no credit score threshold and no interrogation. From a clean, complete scenario, funds can be available in as little as 24 hours, and interest can be capitalised for up to six months, so there is nothing payable while the refinance or the sale that repays us is arranged properly.

Back to the dates, because the expiry date does not care where the money comes from.

The notice the bank has to give you

The Banking Code of Practice is the part of this most business owners do not know exists. The current version took effect on 28 February 2025, ASIC approved it, and signing up to it is a condition of membership of the Australian Banking Association for member banks with a retail presence in Australia. It is monitored by the Banking Code Compliance Committee. Under the Code's own definition, a business is a small business where it, or its business group, had an annual turnover of less than $10 million in the previous financial year and has fewer than 100 full-time equivalent employees — a wider test than the version it replaced. A non-bank lender or a private lender is not bound by it, so the first question is who the facility is actually with.

1. 1
   Three months notice of a decision not to extend.Clause 93. Where you are not in default, and the principal is not being fully repaid across the term by regular periodic repayments, the bank will tell you it has decided not to extend at least three months before you need to repay in full. That is the clause an interest-only commercial facility sits squarely inside, and three months is the window this page is really about.
2. 2
   A renewal does not have to be on the old terms.Clause 94. If the bank does agree to extend or refinance, it is not required to do so on the same terms — a lower limit, new covenants, a shorter term or a different price are all still a renewal. Price it against the alternatives rather than signing it because it is the offer in front of you.
3. 3
   Thirty days notice of a payment failure before a demand.Clause 82. Where a payment obligation has not been met, the bank will give no less than 30 days notice of the failure before it demands full repayment or starts enforcement proceedings. Clause 84 is the exception: shorter notice, or none, where you or a guarantor is insolvent, or where it is reasonable to manage a material and immediate risk.
4. 4
   A non-monetary default has to be a material one.Clauses 87 to 92 set out the closed list of non-monetary events a bank may act on for a small business — insolvency, enforcement by another creditor, breach of a separate financing arrangement, failure to provide financial information, letting an insurance policy or a licence lapse, and a handful of others. Clause 90 adds the test that matters: the bank will only act where the event is material by its nature, or it reasonably considers the event has had, or is likely to have, a material impact.
5. 5
   A copy of the valuation you paid for.Clauses 97 and 98. Where the bank obtains a valuation of commercial or agricultural property and you have paid for it, it will give you a copy along with the instruction it gave the valuer, except where enforcement proceedings have started. Ask early. An incoming lender will want to see it, and the instruction often explains a figure that looks wrong.

If the bank has given you less than the Code allows, say so in writing to the bank, in the bank's own complaints channel, and keep the dates. A Code breach does not make the debt go away, but a bank that has skipped a step will very often extend a deadline it has not properly given.

How long a refinance takes, counted backwards

Three months sounds like plenty. In our experience a bank or non-bank refinance of a commercial facility runs three to eight weeks from a complete application, and the long tail is longer — and almost none of that is the credit decision. It is a valuation to be instructed and returned, financials to be collected and read, a queue, then documents and a settlement booking. A file that goes back to credit for one more question loses a fortnight. Counted backwards from the expiry date, the work has to start in the first week of the notice period, not the last.

1. 1
   Write down the date the money is actually due.Not the review date, not the date on the letter. The date the principal has to be repaid. Everything else is arranged around it.
2. 2
   Ask the bank, in writing, for the payout figure and for an extension.Both, in the same email, and ask for the answer in writing. A bank that has decided to exit usually prefers an orderly repayment to an enforcement and will often extend for a borrower who is demonstrably arranging a refinance. Our guide to getting a mortgage payout figure sets out what to ask for and what the figure includes.
3. 3
   Ask why, and ask for the valuation.The general reason tells the next lender what it will have to get comfortable with. The valuation tells it what the security is worth. Both are easier to get before enforcement is on the table than after.
4. 4
   Start the replacement application in the same week.In parallel, not after the extension request comes back. If the extension is granted, a refinance already in progress is not wasted work; if it is refused, the weeks spent waiting cannot be recovered.
5. 5
   Work out what the property could release, and how fast.If the numbers are tight, the question is whether equity can be reached in time and how much of the facility has to go. What LVR means covers the arithmetic a lender will do, and it is the same arithmetic on either road.

What happens if the date passes with nothing arranged

The principal becomes repayable and the contract takes over: interest on the overdue balance on whatever basis the agreement sets, then a demand, then enforcement under the security. For a mortgage that means the notice the relevant state legislation requires before a power of sale can be exercised — our guide to a default notice on a mortgage covers what that notice has to say and how long it runs. Where the security is a company asset, a receiver appointed under the security documents is the faster route and does not need a court.

None of it is instant, and none of it is automatic. What accelerates it is silence. A borrower who answers the phone, puts a plan in writing and reports on it is treated differently from one who goes quiet, because the bank's own file has to record what it did to get the money back without enforcing.

Farm land is a genuine exception and worth saying plainly. Farm debt mediation legislation applies, and in New South Wales the Farm Debt Mediation Act 1994 says a creditor must not take enforcement action in respect of a farm mortgage unless an exemption certificate is in force, and that enforcement action taken in contravention of the Act is void. The Act also provides for a notice inviting the farmer to mediate, which the farmer must answer within 20 business days, and a certificate is available to a creditor that gave that notice and attempted to mediate in good faith throughout a period of three months. Other states run their own schemes on their own timeframes. If the security is farm land, that is a question for a solicitor in your state before it is a question for any lender.

The four ways this ends

1. 1
   Another lender refinances the whole facility.The cleanest outcome and the one to chase first, at bank or non-bank pricing if there is time for it. Refinancing a business loan is the page for how that is assessed.
2. 2
   The incumbent extends, on new terms.Often on a reduced limit, which means finding the difference from somewhere. This is the version people do not plan for and it is the most common compromise: the bank stays, smaller, and something else covers the reduction.
3. 3
   The facility is paid out against the property.Where the equity is there, a first mortgage pays the bank out and ends the deadline, or a second mortgage sits behind the existing loan and reduces it to a level the bank will renew. Both leave the exit — a sale, or a slower refinance done properly — to a date you choose rather than one the bank imposed. When a bank calls in a facility sets out what that looks like end to end.
4. 4
   The asset is sold.Sometimes the right answer, and a much better one when it is your sale rather than a mortgagee's. A sale takes months on a normal market, which is the argument for bridging the gap: bridging while something slower completes is the same structure whether the exit is a sale or a bank.

When borrowing is not the answer here

Replacing the facility makes sense when the business behind it works and the problem is the date rather than the debt — when the trading position is sound, the security carries the loan, and there is a real exit in view. It makes sense when the choice is between a loan you arranged and a receiver somebody else appointed.

It does not make sense in three situations, and it is worth being blunt about them. If there is no meaningful equity, this is not our answer, and no amount of urgency changes the arithmetic. If the business cannot service the debt it already has, a second lender does not fix that — it adds to it, and borrowing against a family home to hold a loss open is how somebody loses the house as well as the company. And if there is genuinely time to refinance at bank pricing, take the time: the cheaper road is the better one whenever the calendar allows it, and we will say so on the phone. Where the honest position is that the business is insolvent or heading there, the conversation to have is with a registered liquidator or a restructuring practitioner, and having it a fortnight earlier is worth more than any lender can do.

This page explains what a facility's expiry means and what the Banking Code of Practice requires of a subscribing bank. It is general information, not legal or insolvency advice, and it is no substitute for advice on your own circumstances: speak to a lawyer, a registered liquidator or your accountant, read your own facility agreement, and check the Code's published text on the Australian Banking Association's site for the clauses referred to here.

Reviewed by Paul Stone, Joint Chief Executive