Most business owners renegotiate their supplier contracts every year, shop their insurance every renewal, and let their largest single expense roll over untouched for a decade.
That expense is their loan.
This guide covers what actually moves the price of a business or commercial facility in Australia, how to prepare a review that gets taken seriously, and — just as importantly — when moving lenders is the wrong answer.
Why loans drift
A commercial or business facility is not a fixed-price product. It is priced at the time it is written, on the basis of your circumstances, the lender’s appetite, and the competitive situation of that week. All three change.
What does not change automatically is your rate.
Lenders have no obligation to reprice a facility that is performing. A loan that rolls over on autopilot is, from the lender’s side, a good outcome. The borrower who never asks is subsidising the borrowers who do.
Four things that move commercial loan pricing
1. Which desk holds the file. A major bank is not one lender. Business banking, commercial property, asset finance and the branch network run separate credit policies, separate funding assumptions and separate pricing discretion. We wrote about a real example of this in Same Bank, Different Desk.
2. Your loan-to-value position. Property values move. A facility written at one loan-to-value ratio may sit at a materially different one today, and lower risk should be priced as lower risk — but only if someone recalculates it.
3. The strength of the file, not just the numbers. Complete, current financials presented in the format the credit team expects will be assessed differently from a file that creates work. Discretion is applied to easy approvals.
4. Whether there is a genuine alternative. A competing assessment is a fact. Facts move pricing conversations in a way that opinions do not.
How to prepare a review that gets taken seriously
- Get your numbers current. Latest financials, current rent roll or trading figures, up-to-date position on any related entities.
- Know your own loan-to-value ratio before the conversation. If you cannot state it, you cannot argue from it.
- Ask for the review in writing, and ask for a written response. Verbal indications are not a position you can compare.
- Give the lender something to work with. A clean, explained file with no surprises is the single biggest lever a borrower controls.
- Set a date, not an intention. Reviews that are “on the list” never happen. Anniversary of settlement is a natural trigger.
When refinancing is the wrong answer
- Break costs on a fixed facility can exceed the benefit of a lower rate for the remaining term.
- Establishment, valuation and legal costs on a new facility are real, and on commercial deals they are not small.
- Existing relationship value matters where you expect to need flexibility, further facilities, or fast turnaround.
- Security restructuring may trigger stamp duty or new valuations you had not budgeted for.
A properly run review often ends with the borrower staying — at a better price. That is a good outcome, not a failed process.
When it is worth moving
- Your existing lender declines to reprice, and a competing lender has assessed and approved a comparable facility.
- Your circumstances have improved materially and the existing pricing was set before that.
- The current desk is the wrong desk for what the loan has become.
How a broker changes the process
A broker does three things a borrower usually cannot do alone: know which desk at which lender currently has appetite for this shape of deal; present the file in the format that credit teams approve quickly; and hold a live comparison so the conversation is about facts rather than loyalty.
Related: if your commercial facility is coming up for expiry or annual review, see what lenders re-check at a commercial loan review and how to prepare.
General information only. This article does not take into account your objectives, financial situation or needs. Consider whether the information is right for you and seek professional advice before making credit decisions. Jack (Muyuan) Si is a Credit Representative (516785) of Buyers Choice Licencing Pty Ltd ACN 626 172 281 (Australian Credit Licence No. 509484).