"Does not meet our lending criteria": what that decline line really means

When a lender says your application “does not meet our lending criteria”, it means you failed at least one rule in their internal rulebook. That could be a fixed gate such as minimum trading time, turnover, credit score, industry or security type, or their judgement about whether you can repay. It’s a mismatch with that lender, not a verdict on your business, and another lender may fit.

The trouble is that the sentence is built to tell you nothing. It’s the same wording whether you were a month short of their trading minimum or whether a court judgment you’d forgotten turned up on your file. This guide unpacks what “criteria” actually covers, how to find out which one you tripped, and what to do once you know.

What does “lending criteria” actually include?

Think of a lender’s criteria as two layers.

Layer one is policy. These are the hard gates that apply to everyone, often checked by a system before a person ever looks at the file. If you fail one, the answer is no regardless of how good the rest looks.

Layer two is the credit assessment. This is where an assessor (or a scorecard) weighs up your numbers, your history and your story, and decides whether they’re comfortable.

A decline letter uses the same phrase for both. But the fix is completely different, so the first job is working out which layer you fell at.

Here are the criteria that most often sit behind the line:

Criterion	What the lender is checking	Layer
Trading time	Months since your ABN was active or the business started trading	Policy
Turnover	Minimum monthly or annual sales, usually from bank statements or BAS	Policy
Industry	Whether your ANZSIC code is on a restricted or excluded list	Policy
Security	Property type, location, loan-to-value and whether second position is allowed	Policy
Residency and structure	Citizenship or residency, trusts, recently changed directors	Policy
Credit score cut-off	A minimum personal or commercial score	Policy or assessment
Repayment history	Defaults, judgments, late payments, past insolvency	Assessment
Serviceability	Whether profit and cash flow cover the new repayment with room to spare	Assessment
Tax position	ATO debt, payment plans, late lodgements	Assessment
Bank statement conduct	Dishonours, overdrawn days, gambling, heavy short-term lending	Assessment

The published gates of online lenders give a sense of how sharp these lines are. Several well-known online lenders publish minimums of around six months’ trading and roughly $5,000 to $6,000 a month in turnover for their smaller unsecured loans, with higher bars of two or three years’ trading for larger limits. Five months of trading doesn’t get you a “maybe”. It gets you this letter.

“Outside our credit policy”, “credit appetite” and other versions

Lenders have several ways of saying the same thing. Each one carries a faint clue:

• “Does not meet our lending criteria”: the catch-all. Could be either layer.
• “Outside our credit policy”: leans towards a hard rule, such as industry, security, structure or purpose.
• “Outside our current credit appetite”: often policy that has tightened recently, such as a lender pulling back from an industry or a postcode.
• “Unable to assist at this time”: frequently a scorecard or automated decline, especially online.
• “After careful consideration”: a person looked at it, which points more to the assessment layer.

None of these is definitive. Treat them as a hint, then confirm. Our Decline Decoder can help you narrow it down from what you already know.

Why won’t the lender just tell you?

Most of the time it isn’t personal. There are a few ordinary reasons:

1. The decision came from a scorecard. Automated systems often return a pass or fail without a reason the front-line team can see.
2. Credit policy is confidential. Lenders don’t publish the exact cut-offs, because applicants would shape their applications to them.
3. They want to avoid a debate. A specific reason invites an argument; a general one closes the file.
4. Occasionally, they legally can’t. Anti-money-laundering rules can stop a lender from explaining certain decisions. This is rare, but it exists.

Does the lender have to give you a reason?

It depends on who the lender is and what was assessed.

Banks under the Banking Code of Practice. The current Code took effect on 28 February 2025 and widened its small business coverage, so businesses with total borrowings of up to $5 million (including the loan being applied for) can now fall within it. Clause 81 says that if the bank decides not to approve a loan, it will tell you “the general reason why, unless it is reasonable for us not to do so”. You can read the Code on the Australian Banking Association’s website. “General reason” won’t be a detailed breakdown, but it should at least tell you whether it was your trading, your credit, your security or your capacity to repay.

Non-bank and online lenders aren’t bound by the Banking Code, so there’s no matching commitment. Many will still tell you if you ask well.

Credit report information. Where an application for consumer credit is refused because of your credit report, section 21P of the Privacy Act requires the lender to say so in writing and name the credit reporting body. A business loan isn’t consumer credit, so a business lender may not be strictly bound by that notice. Still, most business lenders check the directors’ personal files, so ask which bureau they used. Separately, the OAIC confirms you can get a free copy of your report if you’ve been refused credit within the past 90 days, on top of the free copy every three months. Our guide to getting your free credit report shows how.

The one question that unlocks the rest

Our page on finding the real reason you were declined walks through the full process. If you only ask one thing, make it this:

“Was this declined because of a policy rule, or because of the credit assessment? And if it was policy, which rule?”

Lenders find this easy to answer because it doesn’t require them to argue the merits. And the answer sorts your next step instantly:

• Policy decline: the same file may suit a different lender as it stands. The task is finding a lender whose rules you meet, not changing your business.
• Assessment decline: something in the file worried them. You’ll want to know what before you show it to anyone else.

If a broker submitted the application, ask them the same question. Brokers often hear the credit team’s actual words.

Already know the reason and want a straight read on where you stand? Check your options here. It takes about a minute.

What to do next, by the criterion you missed

Once you know which rule caught you, the path gets much clearer:

If the rule was…	What usually works	Read more
Trading time	Lenders with shorter minimums, asset-backed finance, or waiting out the gap	Short trading history
Industry	Lenders without your industry on their restricted list	Industry policy
Serviceability	Smaller amount, longer term, or security that reduces the lender’s reliance on cash flow	Serviceability
Credit score or defaults	Specialist lenders who read the story, plus a letter of explanation	Bad credit business loans
Tax debt	A payment plan in place before you reapply	ATO payment plans
Security	Lenders who accept your property type or second position	Security not acceptable

Notice that half the rows are about choosing a different lender rather than fixing yourself. That’s the hopeful part of a criteria decline. The rulebooks really do differ, sometimes a lot.

An example of how this plays out

Illustrative scenario: A landscaping business in its eighth month applied to its bank for a $60k loan for a second truck and a trailer. The letter said the application “does not meet our lending criteria”. When the owner called and asked whether it was a policy or credit decline, the bank said the general reason was trading history: its policy wanted two years of lodged financials. There was nothing wrong with the business. The owner then looked at asset-backed equipment finance, where the truck itself was the main security, and applied once, with eight months of clean bank statements and a short summary of signed contracts.

The lesson isn’t that the bank was wrong. Its rules simply didn’t fit a business at that stage. Asking one question turned a dead end into a direction.

Common mistakes after a criteria decline

• Applying to three more lenders the same week. Each enquiry can be visible to the next lender, and a cluster looks like desperation. Our page on too many credit enquiries explains why.
• Reapplying to the same lender unchanged. If you missed a policy gate, the result will be the same.
• Assuming it’s your credit score. Plenty of criteria declines have nothing to do with credit at all.
• Rewriting the application to dodge the rule. Lenders verify. A mismatch found later is far worse than the original decline.
• Taking the first yes at any price. A decline can make any offer feel like relief. Read our guide to an exit strategy for a private loan before committing to short-term money.

If you’re unsure whether to try again now or later, our page on whether to reapply or wait sets out how to decide.

When the rulebook didn’t fit, find one that does

Most of the people who come to us have a letter with this exact sentence in it. Very often there’s nothing wrong with their business. They simply knocked on a door whose rules were written for someone else, and that’s exactly the kind of mismatch we sort through every day.

Enquiring takes about 60 seconds, and simply asking won’t affect your credit score: there’s no credit check when you first enquire. We won’t spray your details across a pile of lenders, so you won’t be fielding calls from people you’ve never heard of. A real person reads what you send and calls you to talk it through. Please fill in the form accurately, including the wording of your decline letter and any reason the lender gave, so we can steer you towards criteria you actually meet the first time.

Find out where you stand →