How to get out of a business loan you can't keep up with: four exits, in order

You took the loan for good reasons, and for a while the repayment fitted. Now it doesn’t. Maybe takings dropped, a big customer paid late, costs jumped, or the loan was simply sized for a better year. The repayment lands, and something else goes unpaid so it can.

There’s usually a way out. It just helps to take the exits in the right order, because each one needs more from you than the last. This guide sets them out: what each needs, what it costs in dollars, and how it ends. If a bank has already said no to a new loan, the 30-day plan after a decline pairs well with this one.

The figures below are invented to show the mechanics. Your contract and statements decide yours.

Which exit fits where you are now?

Where you are	Try first	Then
Paying on time, but it’s a squeeze	Variation with the current lender	Refinance to a lower weekly repayment
One or two missed repayments	Variation or hardship request, in writing	Refinance, ideally property-secured
Several months behind, default notice issued	Refinance or settlement against property	Asset sale to cut the balance
Business is losing money before the loan	Accountant first	Exit only once the numbers work

Exit 1: ask your lender for a variation

It’s the cheapest exit because nothing new is borrowed, and the right first call, even if you expect a no. A written refusal also helps a new lender understand the situation.

What a variation can look like

• A lower repayment for a set period, then back to normal.
• A longer term, which cuts the repayment but usually raises the total paid.
• A short pause (sometimes called a repayment holiday), with the skipped amount added to the balance.
• Capitalising arrears into the balance, so the account is brought up to date.

Every one of these costs something. Ask for the new repayment, the new end date and the new total repayable in writing so you can compare it against the refinance numbers later.

Why timing matters now

Ask before the next missed repayment, not after. The Australian Banking Association’s Banking Code of Practice, updated from 28 February 2025, widened its definition of financial difficulty to include customers who expect to be unable to meet upcoming repayments. The same update lifted the small-business debt limit to $5 million. That coverage applies to banks that subscribe to the Code, so check whether your lender does. Either way, business.gov.au advises contacting creditors early and asking about hardship provisions.

What to send

1. The last three months of business bank statements.
2. A short note on what caused the shortfall and what has changed.
3. A realistic repayment you can carry, as a dollar figure with an end date.
4. A request for the outcome in writing.

Keep paying whatever you can while you wait. A part payment shows intent; a silence doesn’t.

Exit 2: refinance the loan, even if you’re behind

This is the exit most owners assume is closed. It often isn’t. A new lender doesn’t count missed payments in isolation; it asks whether the business as it trades today can carry a new, more affordable repayment.

What a new lender needs to see

• A written payout figure from your current lender, so the new loan can pay it out exactly.
• Recent statements (typically three to six months) showing deposits and the missed or late debits.
• A plain reason for the arrears, such as a lost contract, a seasonal slump or a late payer, plus evidence it’s over.
• Some form of security or serviceability. An unsecured cash-flow loan is typically sized on turnover and statements, in the range of $5,000 to $500,000. Where there’s property, a first or second mortgage can reach further and tolerates arrears better.

A worked example (illustrative)

A transport owner has a $180,000 equipment loan with $4,200 a month going out and two payments missed after a big client paid 70 days late. The client has now paid. The owner gets a payout figure of $152,000, three months of statements showing the late payer’s money arriving, and a summary of confirmed work for the next quarter. A refinance over a longer term brings the monthly repayment down to $3,100. The total repayable is higher, but the business can carry it. The point of the table below is the trade-off, not the numbers.

	Stay in the loan	Refinance to a longer term
Monthly repayment	$4,200	$3,100
Arrears	Two missed payments	Cleared in the payout
Total repayable	Lower	Higher
Risk	Default notice	Cost of the longer term

Don’t judge by the headline repayment alone. Ask any new lender for the total repayable in dollars, the term, and the fees at start and exit.

Our bridge to a bank refinance page covers when a short specialist loan can carry you to a cheaper lender later.

Exit 3: sell something to cut the balance

If you hold surplus equipment, a spare vehicle, stock that isn’t moving or an investment property that doesn’t need to be kept, a sale can reduce the debt and make Exits 1 and 2 workable.

• Sell first, then ask. A lender will usually say yes to a variation more readily if you can show a $30,000 sale already reducing the balance.
• Check who holds security over the asset. If the loan or another lender has a charge over it, the sale proceeds may need to go to them. Get a discharge in writing.
• Don’t sell what earns your living unless the repayment on it eats more than it produces.

The asset sale exit page explains how to plan this so the proceeds line up with a settlement date.

Exit 4: clear it with a property-secured loan

With equity in a property, you can often replace the loan, plus other expensive debts, with one secured loan sized from $20,000 to $5,000,000 against the property. That stretches the term and usually gives the lowest weekly outgoing.

It’s the strongest exit and the one with the most at stake. If trading doesn’t recover, the property is on the line. Use it where the business works and the debt structure doesn’t. The consolidating business debt with property page explains valuations, second mortgages and how payouts happen at settlement.

Are you ready to see which exit works for your loan?

If you’ve got arrears, a payout figure and a few months of statements, you have enough for a specialist to look at. Check your options with a quick enquiry and we’ll tell you which exit looks workable.

What if the lender won’t help, or you think they’ve treated you unfairly?

• AFCA. If the lender is a member, AFCA can consider complaints from small businesses (fewer than 100 employees) about credit facilities up to $5 million. Check membership using the lender’s exact legal name.
• ASBFEO. The Australian Small Business and Family Enterprise Ombudsman has a debt help page, a debt guide released in November 2024, and dispute support.
• Small Business Debt Helpline. A free service with financial counsellors, on 1800 413 828.

None of these stops the next repayment. Run a complaint alongside an exit, not instead of one.

When funding won’t fix it

If the business loses money even without the loan, a variation or a refinance only delays the problem. Sit down with your accountant and look at margins, rent and wages first. Funding works when it fixes the structure of a business that earns its keep.

A 10-day plan

1. Day 1: Pull the loan contract and find the variation, default and early-payout clauses.
2. Day 2: Request a written payout figure.
3. Day 3: Pull three months of statements and write down what caused the shortfall.
4. Day 4: Work out the repayment the business can carry and the date it normally recovers.
5. Day 5: Send the written variation request.
6. Days 6–7: List any surplus assets and what each could realistically sell for.
7. Day 8: Run your situation through the solution finder.
8. Day 9: Compare the lender’s reply with a refinance option, in total dollars and weekly outgoings.
9. Day 10: Decide, and book the next step.

Choose the exit with the end in view. The refinance exit page shows how to line up the new repayment with realistic takings, not your best month.

Ready to get one repayment you can plan around?

Being behind on a loan feels like a closed door, and it rarely is. We read the agreement, the statements and the payout figure, then find the route that ends the squeeze instead of just shifting it.

Enquiring takes about a minute, and your credit file isn’t touched just for asking; any check comes later, only if you decide to go ahead. We don’t send your details to a pile of lenders, so your phone won’t light up with strangers. A real person looks at your situation and calls you to talk it through. Please fill the form in accurately, including what you owe, what’s been missed and the payout figure if you have it, so we can match the right option first time.

Find out where you stand →