A short term loan is a tool for getting from A to B. The exit strategy is B. It’s the single most important part of the conversation with a lender, and the part builders most often gloss over. Get it right and your loan gets approved faster, priced better and repaid without stress. Get it wrong and a quick fix turns into a long headache.
Key takeaways
- Your exit is how the loan gets repaid in full, usually by a sale, a refinance or a known payment.
- Lenders assess the exit as closely as the security property.
- Be conservative on timing and price, and add a buffer to the term.
- Always have a back up exit.
- If your exit is running late, talk to your lender early, not on the due date.
What counts as a good exit strategy?
A good exit is specific, realistic and on time. “I’ll sell something” isn’t an exit. “The completed townhouse at unit 2 is listed, similar units nearby have sold in the last three months, and I expect settlement within five months” is.
Here are the exits builders use most, and what lenders like to see for each.
| Exit | How it works | Evidence that helps |
|---|---|---|
| Sale of a completed property | A house, townhouse, unit or lot is sold and the loan is repaid at settlement | Signed contract, or agent’s appraisal and recent comparable sales |
| Refinance to a longer term lender | A bank or other lender pays out the short term loan | Formal or conditional approval, or a clear plan to meet their criteria |
| Progress claims or retention | Money owed under a building contract repays the loan | Contract, payment schedule, claims already submitted |
| Large client payment | A known debtor pays an overdue invoice | Invoice, correspondence, payment arrangement |
| Business cash flow | Regular income repays the loan over the term | Recent bank statements showing turnover |
| Sale of another asset | Equipment, a vehicle or another property is sold | Valuation, listing or sale contract |
How to build an exit strategy lenders trust
- Pick your main exit. One clear event that repays the loan in full.
- Put a date on it. Work backwards from settlement, refinance approval or the payment date.
- Stress test the date. Add time for delays: council sign offs, slow sales, bank processing.
- Stress test the amount. What if the sale price is lower or the claim is short paid?
- Choose a back up exit. If the sale’s slow, can you refinance? If the refinance falls over, can you sell?
- Match the loan term to your realistic date plus the buffer.
- Write it down in a few sentences and send it with your application.
Example: an exit built on a sale
Example only. A builder in Werribee takes a hypothetical $220,000 loan over his home to finish the last of three townhouses. The first two sold quickly. His main exit is selling the third on completion, and he shows the lender the recent sales of the first two.
He expects completion in three months and settlement about two months after that, so he takes an eight month term to leave room. His back up is refinancing the finished townhouse and renting it out.
Example: an exit built on a refinance
Example only. A small builder in Launceston uses a fast first mortgage over a factory unit she owns to fund equipment and working capital while her bank reviews a longer term facility. The bank has asked for her latest financials, which her accountant is finalising.
Her exit is the bank refinance, expected in about three months. She takes a six month term in case the bank takes longer, and her back up is selling the factory unit, which she no longer needs.
Example: an exit built on progress claims
Example only. A concreting business in the Sunshine Coast hinterland borrows against the owner’s home to cover plant hire and wages across three slab jobs. The exit is the progress claims on those jobs, all under signed contracts with established builders. The loan term covers the expected payment dates plus a few extra weeks in case a builder pays late.
What happens if your exit runs late?
It happens. Sales fall through, banks ask for more paperwork, builders pay late. What matters is how early you act.
- Talk to your lender as soon as you see a delay, not the week the loan is due.
- Bring evidence: the new settlement date, the refinance status, the updated sale campaign.
- Look at your back up exit and whether it’s now the better path.
- Ask about options such as extending the term or refinancing to a different loan. These depend on your situation and aren’t automatic.
A borrower who calls early with a plan is in a far stronger position than one who goes quiet.
Choosing the right loan for your exit
Different exits suit different loan structures:
- Sale or refinance of a property: a business bridging loan is built for this.
- Progress claims or client payments: short term working capital, either unsecured for tradies trading 6+ months, or secured against existing property for larger amounts.
- Finishing a project before selling: a completion loan secured against property you already own.
Our short term construction finance page explains how each structure works for small builders. For a closer look at bridging, read bridging finance explained for builders.
Every loan is priced on your circumstances, and our lending team looks for the sharpest rate available for your situation. A clear, well evidenced exit is one of the best ways to put yourself in a strong position.
Key facts
- Loan size: $20,000 to $5 million
- Security: existing property you or a guarantor own, or business turnover for unsecured loans
- Speed: property secured loans in as little as 24 hours in some cases
- Term: typically 1 to 12 months for property secured loans
- Purpose: business and investment purposes
- Suits: builders and tradies with a clear sale, refinance or payment on the way
Ready to talk through your exit?
If you’ve got a clear plan for repayment, you’re halfway there. Check your options with our 60 second form. It won’t affect your credit score, and a lending specialist will call to talk through your exit and tell you quickly if we can help.
