Refinancing out of a private loan

Why does the exit matter so much?

Short-term private loans are built to be temporary. They solve a problem quickly, such as a tax debt, a settlement gap or an urgent supplier, but they’re usually priced above long-term finance and have short terms. If you stay in one longer than you planned, the cost adds up.

That’s why every private loan should come with an exit plan. For many owners, that exit is a refinance into longer-term finance with a bank or mainstream lender.

What does the next lender need to see?

The lender you’re refinancing to will ask one central question: is the problem that sent you to a private lender now fixed? Typically that means:

Problem at the start	What fixes it
Overdue tax returns	Returns lodged and assessed
ATO debt	Paid, or on an agreed payment plan being met
Credit default	Paid, explained, and clean history since
Trading dip	Recent financials showing recovery
Unclear structure	Entities and ownership documented

On top of that, the new lender will want to see that you’ve kept up with the private loan itself. Clean conduct is a strong signal.

A refinance timeline

1. At the start: decide the likely exit lender and what they’ll need.
2. Months 1–3: fix the issue: lodge returns, set up or complete the ATO plan, gather records.
3. Three to six months before expiry: begin discussions and supply documents.
4. Two months before: the new lender assesses and approves.
5. Before expiry: settle the refinance and pay out the private loan.

If you’re running late, contact your private lender before the expiry date to discuss an extension. It’s far easier to arrange in advance.

Where can I refinance to?

That depends on how the business looks by then. Options include a standard first mortgage business loan, a longer second mortgage, a business line of credit for ongoing cash flow needs, or a full business loan refinance that consolidates several facilities.

What if the bank still says no?

If a bank won’t refinance yet, a mainstream non-bank lender may. They often accept slightly less perfect files. If you’ve been declined, our guide on what to do after a bank says no runs through the next steps. And you can always ask us to look at your situation.

What else is refinancing out of a private loan called?

Lenders, accountants and search engines don’t all use the same words. You’ll also see this entry described as Exit finance and Private loan refinance. In our A–Z index every one of those names points back to this page, so whichever term you searched, you’ve landed on the same thing. If a lender uses a name you don’t recognise, ask them to describe how the security, the term and the repayments work; that tells you far more than the label.

Where does it sit in the directory?

This entry lives on the property-secured shelf. It’s most often used for property and projects, cash flow and working capital, and the security usually involved is residential or commercial property. It usually involves a little more paperwork and assessment than the quickest options, so start early. Its closest neighbours are:

• First mortgage business loans — The lender holds first place on title — usually the largest amounts and longest terms.
• Caveat loans — Short-term money secured by a caveat lodged on the title instead of a full mortgage.
• Private business loans — Non-bank lenders who assess the deal and the security, not just the credit score.
• Short-term property-secured loans — Property-backed money for months, not decades, with a clear exit planned from day one.

To compare all of them at once, filter the Loan Finder by purpose and security.

Common mistakes to avoid

• Guessing the property value. Use a recent appraisal or comparable sales rather than the figure you’d like it to be; an inflated estimate only creates a gap later.
• Forgetting what’s already on the title. Every existing mortgage, caveat or private loan affects how much room is left, so list them all upfront.
• Leaving the exit vague. With property-backed lending, the plan for repayment carries as much weight as the security itself. Write it down in two sentences.
• Not involving co-owners early. Everyone on the title will need to sign, and a late surprise can stall settlement for weeks.
• Borrowing the bare minimum. Fees, adjustments and small overruns add up; a modest margin is far cheaper than a second loan.

What should I ask before signing up for refinancing out of a private loan?

A short list of questions saves a lot of regret. Put these to any lender or specialist before you commit:

1. What is the total repayable, in dollars? Ask for one figure covering interest over the full term plus establishment, legal, valuation and any line or discharge fees.
2. How is the property value being assessed? Some lenders order a formal valuation, others rely on desktop data or agent evidence. Knowing which helps you plan timing.
3. What happens if my exit takes longer? Get extension terms in writing before you sign, including any default or holding charges.
4. Can interest be prepaid or capitalised? For short terms this can protect cash flow, but it changes what’s owed at the end.
5. Who needs to sign? Confirm early whether every owner, director and spouse on title must sign or seek independent advice.

If an answer is vague, ask again or ask for it in writing. Good lenders are happy to explain their terms clearly.

Plan your way out

If you’re in a short-term loan now, or about to take one, the time to plan the exit is today. A quick enquiry is enough to start; there’s no credit check and your details aren’t circulated around the market. One specialist looks at where you are and what the next lender will need.

Be candid about the current loan, its expiry date and what’s been fixed so far. That’s how we can map a realistic path. Start your enquiry.