There is no statutory obligation on an Australian lender to tell a business borrower why an application was declined. The National Credit Code, which carries the consumer disclosure duties, applies to credit for personal, domestic or household purposes and not to business lending. What you get instead is a commercial decision, and the real reasons are usually serviceability, account conduct, trading history, industry appetite or security.
The short version
- Business lending sits outside the National Credit Code, so the consumer disclosure duties that would require a reason do not apply.
- "A commercial decision" almost always means the application failed one part of the lender's credit policy, and the lender has chosen not to say which part.
- Six causes account for most business declines: serviceability, account conduct, trading history, industry coding, security shortfall and recent enquiry activity.
- Your credit file records the enquiry, not the outcome. Commercial and consumer credit reporting run under different rules.
- You can ask in writing for the specific policy criterion that was not met. The lender may still decline to itemise it.
Do lenders have to give you a reason?
No. The National Credit Code applies to credit provided wholly or predominantly for personal, domestic or household purposes, or to buy or improve residential investment property. Business lending falls outside it, so the consumer disclosure duties do not apply and no statutory reason is owed.
The Australian Securities and Investments Commission describes the Code's reach as credit provided wholly or predominantly "for personal, domestic or household purposes, or to purchase, renovate or improve residential property for investment purposes, or to refinance credit previously provided for this purpose". Business and non-residential investment purposes are outside that description. The Code is Schedule 1 to the National Consumer Credit Protection Act 2009.
That single boundary explains an experience thousands of Australian business owners find baffling every year. The protections they have encountered as consumers, applying for a home loan or a car loan, simply do not travel with them when they apply as a business.
Two qualifications matter.
The Banking Code of Practice is a separate instrument and it binds subscribing banks only, not the wider lending market. It has contained commitments relating to small business customers, and its provisions change between versions, so check the current version published by the Australian Banking Association rather than relying on a summary.
And the line between business and consumer credit is not always where you assume. Sole traders, and borrowing with a mixed purpose, can fall back inside the Code depending on the predominant purpose of the credit. Where that happens, the consumer obligations apply and the answer to this question changes.
That boundary is also not yours to choose. In April 2025 the Federal Court found in proceedings brought by ASIC against Green County Pty Ltd and Max Funding Pty Ltd that a business lender had engaged in unlicensed credit activity despite holding signed business purpose declarations, because reasonable inquiries had not been made. Characterisation follows the actual purpose of the credit, not the label on the form.
What does "a commercial decision" usually mean?
It usually means the application failed the lender's own credit policy rather than any single test, and the lender has chosen not to itemise which part. Policy failures are common and are rarely about you personally.
Credit policy is a set of rules, not a judgement. It says things like: this industry code is outside appetite this quarter; minimum twelve months of ABN registration; minimum average monthly deposits; no more than a set number of days in negative balance across the last ninety days; this security type is not accepted for this product. An application passes or fails each rule mechanically.
There are ordinary reasons a lender will not itemise the failure. Credit policy is commercially sensitive and lenders do not publish the thresholds. Giving a specific reason invites an argument about that reason when several other rules may also have failed. And front line staff often do not know: the decision arrives from a credit team or a decision engine with a status, not an explanation.
None of that makes the decline meaningless. It means the information you want exists inside the lender and is not being volunteered. The next two sections deal with getting closer to it: first by understanding what usually fails, then by asking properly.
It is also worth saying plainly that a decline from one lender is a decline against one policy. Appetite differs enormously across the Australian market, and a file that fails at a major bank can be entirely ordinary to a non-bank lender that prices for it.
What are the six most common real reasons a business application is declined?
Serviceability on the reported figures, account conduct in the business bank statements, ABN and GST trading history, industry risk coding, a security shortfall, and recent credit enquiry activity.
Serviceability. The lender tests whether the business can service the new repayment out of demonstrated earnings, after existing commitments and a buffer. It works from the reported figures, not the ones you explain over the phone, which is why add-backs that are not documented rarely help. How debt serviceability is actually assessed sets out the calculation in detail.
Account conduct. Most non-bank lenders and many banks read the last three to twelve months of business bank statements directly. What they look for is dishonours, days in negative balance, ATO payments stopping, gambling transactions and existing repayments to other lenders that were not disclosed. Conduct is the single most under-appreciated factor, because it is visible, recent and impossible to explain away.
ABN and GST trading history. Many policies set a minimum period of ABN registration and GST registration, and some measure it from the date of GST registration rather than ABN registration. A business that has traded for years under a new entity structure reads as new to the policy. Finance for businesses under twelve months of trading covers that case.
Industry risk coding. Lenders code industries by ANZSIC and set appetite by code. Some codes are excluded outright, others are capped or priced differently. This changes over time and it is not a judgement about your business.
Security shortfall. The facility sought exceeds what the available security supports, or the security offered is a type the lender does not accept for that product. This is the most fixable of the six, either by resizing the facility or by changing the structure.
Recent credit enquiry activity. A cluster of applications in a short window reads as a business being declined repeatedly, whether or not that is what happened. It is a common self-inflicted wound, and how many business loan applications is too many explains how the pattern is read.
| Reason | What the lender is testing | How you can tell this was the problem | How long it takes to fix | Would another lender see it differently? |
|---|---|---|---|---|
| Serviceability | Demonstrated earnings against the new repayment plus existing commitments | The facility sought is large relative to reported profit | One reporting cycle at minimum | Sometimes. Calculation methods and buffers differ |
| Account conduct | Dishonours, negative days, undisclosed repayments | Visible in your own last 90 days of statements | Three to twelve months of clean conduct | Rarely. Most lenders read the same statements |
| Trading history | Time since ABN and GST registration | You know your registration dates | Only time fixes it | Yes. Minimums vary widely |
| Industry coding | ANZSIC code against current appetite | Nothing in your file explains the decline | Not fixable by you | Yes, and this is the clearest case for changing lender |
| Security shortfall | Facility size against realisable security | The gap is arithmetic once valued | Immediately, by resizing or restructuring | Yes. Accepted security types differ |
| Enquiry activity | Number and timing of recent applications | Your own application history | Three to six months of no new applications | Somewhat, but most lenders look at it |
How do you ask for a reason in writing?
Ask the lender in writing for the specific policy criterion that was not met, request it under the lender's internal dispute resolution process, and keep the correspondence.
Wording you can adapt:
I am writing about application [reference number], declined on [date]. I understand the lender is not obliged to provide reasons for a business credit decision. I am nonetheless asking whether you are able to tell me which credit policy criterion the application did not meet, so that I can address it before applying again. If this cannot be provided, please treat this letter as a complaint under your internal dispute resolution process and confirm receipt.
Send it to the lender's complaints or internal dispute resolution address rather than to the broker or the front line contact, and keep a copy.
Set your expectations honestly. The lender may decline to itemise, and there is no obligation on it to do so for business credit. What the letter reliably achieves is a written record, a response from someone senior enough to give a considered answer, and occasionally a general steer such as "conduct" or "serviceability" that is worth a great deal even without the detail.
Whether the Australian Financial Complaints Authority can consider a complaint about a business credit facility depends on AFCA's Rules, including its definition of a small business and its monetary limits, and those are revised from time to time. Check the current Rules and Operational Guidelines on afca.org.au before assuming a complaint is in remit.
Does a declined application show on your credit file?
The enquiry is recorded, not the outcome. Commercial credit reporting and consumer credit reporting operate under different rules, and what is visible to the next lender differs between them.
The distinction is genuinely important and almost never explained.
Commercial credit reporting covers credit sought in the name of the business entity. It sits largely outside the comprehensive credit reporting regime that governs consumer credit, and it can include information that consumer reporting does not, including commercial defaults and court judgments and, for some bureaus, adverse information on the entity.
Consumer credit reporting covers credit in your personal name, and it is governed by the credit reporting provisions of the Privacy Act 1988. Those provisions set what may be recorded and how long each type of information may be held.
Two things follow. First, a business loan application can generate an enquiry on your personal file as well as the company's, because directors are commonly assessed personally and a guarantee is standard. Second, the retention periods differ by information type and by regime, and they are set under the Privacy Act rather than by the lender. Rather than trusting a figure quoted on a blog, pull both files. You are entitled to a free copy of your consumer credit report from each bureau, and the Office of the Australian Information Commissioner publishes current guidance on what may be held and for how long.
What is not recorded is the decision. There is no field on your file that says declined. What the next lender sees is that an enquiry was made, by whom, and when, which is why the pattern of applications matters more than any single one.
What should you fix before you apply again?
Work through the six reasons in order of what you can actually change in ninety days, and do not submit another application until at least one of them has moved.
Days 1 to 7. Pull your own business bank statements for the last ninety days and read them the way a credit assessor would. Count dishonours and days in negative balance. Pull your consumer and commercial credit files. Write down your ABN and GST registration dates.
Days 7 to 30. Fix conduct. Move direct debits away from dates when the account runs thin, clear any dishonour pattern, and make sure ATO obligations are lodged even where they cannot be paid in full. Get your accountant to bring the financials up to date, because serviceability is assessed on reported figures and stale accounts cost you.
Days 30 to 90. Let the file season. No new applications. If the problem was serviceability, either the earnings need to move or the facility needs to be smaller. If it was security, restructure the request around what you actually hold. What lenders require on a business loan application is the checklist to work against.
Then reconsider the lender, not just the file. If the cause was industry coding or a policy minimum you cannot move, no amount of preparation changes the outcome at that lender, and the right answer is a different one. What to do when a bank declines a business loan covers the alternatives and what they cost.
The single next step: read your own last ninety days of bank statements before you speak to anyone. Most of the answer is already in them.
This is general information, not financial or legal advice. Nothing here is a promise that asking for reasons, complaining, or making any change will alter a lending decision. Credit decisions are made by lenders under their own policies and no outcome is guaranteed.
Funding Loop is a finance marketplace. We work with a panel of lenders, we do not lend ourselves, and our panel does not represent the whole market.
Sources: ASIC, National Credit Code, page last updated 1 August 2025; National Consumer Credit Protection Act 2009; ASIC proceedings against Green County Pty Ltd and Max Funding Pty Ltd, Federal Court of Australia, April 2025; Privacy Act 1988 credit reporting provisions and OAIC guidance; Australian Banking Association, Banking Code of Practice; AFCA Rules and Operational Guidelines. Checked 26 August 2026.
Last reviewed: August 2026.
Ready to see your options?
One application, matched across our lender panel - free, and no obligation to proceed.
General information only - it doesn't take your situation into account. Consider whether a product suits your business before acting, and get independent advice where you need it. No credit check to see your options. A credit check only happens if you choose to formally proceed with a lender.