An exit strategy is one of the most important parts of a private business loan application. It explains how the borrower expects to repay the loan at the end of the term.
This article is general information only and relates to business-purpose lending.
Why exit strategy matters
Private business loans are often short-term. The lender is not only asking whether there is property equity today. They also want to know what happens next.
A good exit strategy reduces uncertainty. It shows the loan has a defined purpose and a realistic repayment path.
Common exit examples
Refinance is one common exit. The borrower may use private funding for speed, then refinance to a bank or non-bank lender once time-sensitive pressure has passed.
Sale of property is another possible exit, especially where the property is already listed or there is a clear sale plan.
Sale of a business asset can also be relevant. For example, the borrower may use short-term funding to complete a transaction while waiting for another asset sale to settle.
Incoming debtor payments, project payments or settlement proceeds may also support an exit where the timing and evidence are clear.
What weakens an exit strategy
A weak exit is vague. Examples include relying on uncertain future profit, hoping a bank will approve without evidence, or planning to sell an asset with no clear timing.
Lenders may still consider complex scenarios, but the borrower should explain the facts clearly and provide evidence where available.
How to present the exit
The application should state the source of repayment, expected timing, backup plan and any documents that support the exit. It should also explain what happens if the exit is delayed.
Equity Tap’s business loan pages explain several property-backed options, including private business loans at https://equitytap.com.au/business-loans/ and bridging loans at https://equitytap.com.au/business-bridging-loans/.
A clear exit strategy can turn a confusing application into an assessable private lending scenario.