If your bank has asked you to refinance elsewhere, it is usually telling you it won’t renew your business facilities and wants them repaid by a set date. That is serious, but it is rarely a crisis on day one. Read the letter carefully, get the reasons, payout figure and any extension in writing, keep every payment up to date, and start lining up a new lender well before the deadline.
The owners who come through this best are the ones who treat the letter as a project with a deadline, not a verdict on their business.
“We’ve decided not to continue”: what the letter actually means
Banks word these letters in different ways. You might read that the bank “won’t be renewing” your facilities at review, that your loans have been transferred to a credit management or business support team, or that you should “make alternative banking arrangements”. Some arrive after a review meeting. Others arrive with no warning at all, which is its own kind of shock.
They aren’t all the same, so it’s worth working out which kind you have.
| What the letter says | What it usually means | How urgent |
|---|---|---|
| Facilities won’t be renewed at expiry | The bank wants out at the end of the term | Real, but usually some weeks or months |
| Overdraft limit being reduced or cancelled | On-demand lending is being pulled back | Can be fast, so check the dates closely |
| Account moved to a specialist or recoveries team | The bank sees higher risk and is watching closely | Expect more reporting and pressure to refinance |
| Notice of default or formal demand | The bank says you’ve breached the loan terms | Urgent: get legal advice the same day |
An exit letter on its own is not a demand. But a missed payment, a dishonoured direct debit or a new IRD problem can turn one into the other, so how you act in the next few weeks matters.
Why banks ask good businesses to leave
It’s natural to take this personally, especially if you’ve banked with them for twenty years. In our experience, though, the reasons are usually about the bank’s rules rather than you as a person:
- A loss year or late accounts. A bank’s annual review leans heavily on your latest financial statements. One bad year can push you outside its policy.
- IRD arrears. Tax debt is a red flag for most banks, even when you’re on an arrangement.
- Account conduct. Regular excesses over your overdraft limit, dishonours or bounced payments get noticed.
- Covenant breaches. If your facility has financial covenants, missing one can trigger a review.
- Industry appetite. Banks sometimes decide to lend less to whole sectors, such as hospitality, construction or particular types of farming.
- Security changes. A drop in property values or the sale of an asset can leave the bank feeling under-secured.
Knowing which one applies tells you where you’re likely to be welcome next. Our guide to how New Zealand banks assess business loans explains the bank mindset in more detail.
Your first week: five things to do
1. Find the deadline and the payout figure. Write the date on the whiteboard. Ask the bank for a full payout figure for every facility, including any break costs on fixed terms.
2. Ask for the reasons in writing. Be polite and specific: “So we can refinance in an orderly way, please confirm in writing why the facilities won’t be renewed, and what, if anything, you consider is in default.” The answer helps a new lender understand the file.
3. Ask for time, with a plan attached. If the deadline is tight, ask for an extension and explain exactly what you’re doing: who you’re talking to, what security is available and when you expect an answer. Banks generally prefer an orderly exit to enforcement, so a credible plan gives you something to negotiate with.
4. Keep the account clean. Pay on time, stay inside your limits and avoid dishonours. Don’t move large sums around without explanation. You want the bank’s file to show a cooperative customer, not a reason to escalate.
5. Get your accountant on board early. Up-to-date management accounts and a short cash flow forecast make every conversation easier. Business.govt.nz has a free cash flow forecaster, and our 13-week cash flow forecast guide shows how to build one for a business under pressure.
Can you challenge the bank’s decision?
Partly. The New Zealand Banking Association’s Code of Banking Practice says banks will deal with your concerns and complaints, including letting you know they’ve received a complaint within five working days. That process is also available to guarantors.
If the bank doesn’t resolve it, the Banking Ombudsman Scheme is free and independent, and businesses can use it. But be realistic about what it can do. The scheme says it can’t investigate a bank’s commercial judgement, which includes decisions about whether to lend. It can look at process, such as whether the bank followed its own loan terms or explained things clearly.
So a complaint can be worthwhile if you were treated unfairly, but it won’t usually force the bank to keep you as a customer. Run any complaint alongside a refinance, never instead of one.
Already know the bank won’t budge? See what refinancing options fit your situation while you still have time on the clock.
Before you sign anything: check what your guarantees cover
This step gets missed when people are stressed, and it’s the one that can hurt most at home.
Many owners have signed a personal guarantee and given a mortgage over the family home to support business lending. Bank guarantees and mortgages are often written to secure all money owed to the bank, not just one loan. That means your house may be tied to the overdraft, the term loan and the credit card all at once.
Before you agree to any new arrangement, including a “short extension” that comes with fresh paperwork, ask your lawyer:
- what each guarantee and mortgage actually secures;
- whether signing anything new increases your personal exposure;
- what has to be repaid for the bank to release your home and your guarantees.
Our guide to how directors’ personal guarantees work covers the basics, and it’s worth reading before your next meeting with the bank.
Where to refinance when the bank wants out
Your options depend on why the bank is leaving and what security you have.
Another bank
If your bank has simply gone cold on your industry, another bank may be happy to lend. But if the issue is IRD arrears, a loss year or account conduct, other banks will usually see the same thing. Applying to several in quick succession can add credit enquiries to your file without getting you any closer. Our page on what happens after a bank decline explains how to avoid that cycle.
A property-secured loan from a specialist lender
If you, or someone supporting you, own New Zealand property with equity, our lending partners can look at loans from $20,000 to $1m on a first or second mortgage, even with an existing home loan in place. No financials are needed for the initial assessment, and bad credit, defaults and arrears are considered case by case. In some cases funding happens within 24 hours of approval, which matters when a bank’s deadline is close.
Cash-flow lending to replace an overdraft
When the bank is pulling an overdraft, an unsecured business loan or a business line of credit may fill the gap. These are usually for businesses trading six months or more, sized on turnover and bank statements. See unsecured options for weaker credit.
A complete refinance
Often the bank isn’t the only pressure. If there’s IRD debt, overdue creditors or an expensive short-term loan as well, it can make sense to pay everything out at once. A complete refinance clears the bank, IRD and other creditors at settlement, leaving one lender and one repayment.
Whichever route you take, a new lender will want to understand what happened and how their loan gets repaid. Our guide on what lenders need to see lists the documents and explanations that move an application along, and our guide to exit strategies helps if the new loan is a bridge to something longer term.
A worked example: a Tauranga café group
Example only: a made-up business drawn from situations we see often.
Two owners run three cafés in Tauranga, banking with the same bank for fifteen years. Their latest accounts show a loss after a hard winter and a costly lease renewal, and GST has slipped behind. At their annual review, the bank says it won’t renew the term loan or the overdraft and wants both repaid within a few months.
- Week 1: They ask for the reasons and payout figures in writing. The bank confirms it’s a policy decision based on the loss and the IRD arrears. Nothing is in default.
- Week 2: Their accountant prepares management accounts showing the two stronger cafés are profitable, with a plan to sell the weaker one.
- Week 3: They enquire with a specialist lender, explaining the bank letter and the IRD position up front. A property-secured loan over one owner’s rental property looks realistic.
- Week 4: They send the bank a short letter naming the new lender and the expected settlement timeframe. The bank agrees to a modest extension.
- Settlement: The new loan pays out the bank and Inland Revenue at the same time. The owners’ home is released from the bank’s security, and the sale of the third café becomes the plan to reduce the new loan.
The bank’s letter felt like the end. In hindsight, it forced a reset the business needed.
Common mistakes in the final weeks
- Waiting for the bank to change its mind. It rarely does once the decision is made.
- Letting IRD slide to keep the bank happy. That swaps one problem for a harder one. Business.govt.nz’s guidance on dealing with tough times is clear that the sooner you consider your options, the better.
- Leaving the refinance to the last fortnight. Valuations, legal work and settlement take time.
- Signing new guarantees under pressure. Get advice first, every time.
- Hiding the bank letter from a new lender. It will come out. Telling the story up front builds trust.
Your bank has said goodbye. That doesn’t mean everyone will.
We speak with owners every week whose bank has decided it no longer wants their business, often after years of loyal banking. It stings, and it’s easy to feel judged. We don’t see it that way. A bank leaving is usually about the bank’s policy, and finding a lender whose policy fits your situation is exactly what we do.
The enquiry takes about 60 seconds, and there’s no credit check when you first enquire. We won’t send your details to a long list of lenders, so your phone won’t light up with calls from people you’ve never heard of. A real person reads your situation, including the bank’s letter and its deadline, and calls you to talk through what’s realistic.
Please complete the form accurately, especially the amount the bank wants repaid, the deadline and the property you could offer as security, so we can match you with the right option first time.