Quick answer
A short-term business loan exit plan is a written statement of how and when the loan will be repaid, with evidence. The three main exits are refinancing to another lender, selling an asset, or repaying from trading. A credible plan names the exit, gives a date with a buffer, lists the steps and milestones to get there, attaches evidence, and includes a plan B if the first exit is delayed.
Key points
- Decide the exit before you decide the loan size or term.
- Refinance, sale and trading are the three main exits; each needs different evidence.
- Set the loan term to the exit date plus a realistic buffer.
- Write down a plan B before you need it.
Short-term funding solves a problem by borrowing time. The exit plan is what makes that time worth borrowing. For a difficult file, it’s also the document that does most of the persuading: a lender who doubts your credit history can still believe a well-evidenced plan to repay.
What are the three exits?
| Exit | How the loan is repaid | Strongest evidence | Read |
|---|---|---|---|
| Refinance | Another lender pays it out, usually at lower cost | A clean file, lodged financials, early bank feedback | Refinance exit |
| Asset sale | Proceeds from selling property, equipment or part of the business | Signed contract, listing agreement, valuation | Asset sale exit |
| Trading | Repayments or a lump sum from business income | Bank statements, forecasts, contracts | Trading exit |
Many plans combine them: a partial repayment from trading plus a refinance of the balance, for example.
How do you write an exit plan a lender will believe?
Work through these six parts. Keep it to a page.
- The exit. One sentence: “The loan will be repaid by refinancing to a bank once lodgements are current and twelve months of conduct are on record.”
- The date. When you expect it to happen, and the loan term you’re requesting with a buffer.
- The steps. What has to happen first: lodging returns, listing a property, completing a contract.
- The milestones. Dated check-points so you and the lender can tell whether it’s on track.
- The evidence. Contracts, letters, statements and forecasts that show the exit is real.
- Plan B. What you’ll do if the main exit is late or fails.
Our exit plan builder turns your answers into dated milestones and an evidence checklist you can share with your accountant.
Want help pressure-testing your plan? Send it through with an enquiry, and a specialist will tell you whether a lender will buy it.
How do you set the term?
Work backwards from the exit date. If a property sale is expected to settle in four months, a term of four months is too tight; buyer finance, settlement dates and paperwork all slip. If a refinance depends on lodging a tax return that isn’t due for six months, the term needs to cover that plus the bank’s own processing time.
| Exit | Common delays to allow for |
|---|---|
| Refinance | Lodgements, bank credit assessment, valuation, settlement booking |
| Asset sale | Time on market, buyer finance clauses, settlement period |
| Trading | Slow months, late-paying customers, seasonal dips |
Extending a short-term loan costs money. A slightly longer term at the start is almost always cheaper than an extension at the end.
What does a weak exit look like?
- “We’ll refinance when things improve.”
- “We expect a big contract soon.”
- “We might sell the property if we need to.”
None of these have a date, a step or evidence. Lenders see them often, and they either decline or price for the uncertainty. Turning a vague exit into a specific one is the single most useful thing you can do before applying.
What goes in plan B?
Plan B should be realistic, not a second hope. Common options:
- Extension with the existing lender, if conduct has been good.
- Refinance to another specialist lender at better terms because the file has improved.
- Sale of a different asset.
- Partial repayment to reduce the balance and make a refinance easier.
See when the exit slips for how to act early if plan A wobbles.
How do you keep the plan on track?
Put the milestones in your calendar. Review them monthly with your accountant or bookkeeper. If something slips, tell the lender early with a revised date. Lenders are far more flexible with borrowers who communicate than with those who go quiet.
A simple monthly check covers three questions: did this month’s milestone happen, is the evidence filed, and does the exit date still hold? If any answer is no, act that week rather than at the end of the term.
An illustrative one-page plan
With invented details, here’s what a good page looks like for a business taking a twelve-month second mortgage to clear ATO debt:
- Exit: refinance both mortgages with a bank.
- Target date: month 11, with the loan term set at 12 months.
- Steps: lodge two overdue returns by month 3; keep BAS current; build clean repayment history; approach the bank in month 8.
- Evidence attached: accountant’s letter confirming the lodgement schedule; ATO statement showing the debt paid at settlement.
- Plan B: refinance to another specialist at improved terms, or sell an investment unit already owned.
Short, specific and checkable. That’s what lenders want to read.
Who should see your exit plan?
More people than you might think. Your lender, obviously. Your accountant, because lodgements, financials and tax timing often drive the exit. Your conveyancer or solicitor if a property sale or refinance settlement is involved. And anyone supporting the loan, such as a guarantor, who deserves to know how and when their commitment ends. Sharing the plan means everyone works to the same dates.
Ready to borrow with a plan?
A clear exit turns a difficult file into a fundable one more often than any other single change. Enquiring involves no credit check, we don’t share your file around a pool of lenders, and a specialist calls to help shape the plan with you. Please describe your intended exit as accurately as you can on the form, even if it’s still rough; it’s where we start. See if you qualify.
Frequently asked questions
What is an exit strategy for a business loan?
It's the plan for how the loan gets repaid at the end of its term. For short-term and private lending it's central to the approval, because the lender is relying on that event rather than on years of repayments.
Which exit do lenders prefer?
The one that's most certain for your situation. A signed sale contract or a refinance approval in progress is stronger than a hoped-for event. Lenders care more about evidence than about which type you choose.
How much buffer should I build into the term?
Enough to absorb normal delays: valuations, lodgements, buyer finance and bank processing all slip. Ask your specialist what's typical for your exit type.
What if my exit depends on someone else, like a buyer?
Include their side in the evidence, such as a signed contract with a finance clause date, and have a plan B in case it falls through.
Can I change the exit during the loan?
Yes, but tell the lender early. Lenders respond much better to a borrower who flags a change months ahead than one who asks for an extension in the final week.