Quick answer
When an industry is under pressure — rising insolvencies, falling demand, cost spikes — lenders tighten their questions for every business in it. They look harder at cash flow, debtors, tax position and security. A business that can show steady banked income, current tax lodgements, a clear plan and, where needed, property security can still borrow. Explaining how you differ from the sector's problems is the key.
Key points
- Lenders read sector news too — expect more questions in a tough industry.
- ASIC publishes insolvency statistics that include industry breakdowns.
- Your own numbers matter more than the sector's headlines.
- Property security and a clear plan can keep options open.
Every industry has its hard seasons. Construction has had waves of builder collapses. Hospitality has faced rising costs and changing habits. Tourism has lived through closed borders. Farming has drought. Mining services ride commodity cycles. When your industry is in the news for the wrong reasons, lenders notice — and every business in that industry feels it, including the ones doing well.
This guide explains how lenders respond when a sector is under pressure and how to show them your business is stronger than the headlines.
How do lenders react to a struggling industry?
Lenders watch their own lending books, industry news and public data. When defaults or insolvencies rise in a sector, they typically:
- Ask more questions about cash flow, debtors and costs.
- Request more documents — more months of bank statements, up-to-date management accounts, aged debtors.
- Tighten policies, such as requiring longer trading history or lower amounts unsecured.
- Lean more on security, especially property.
- Look harder at tax position, because ATO debt often builds up in tough times.
Public data feeds into this. ASIC publishes insolvency statistics, including external administrators’ reports broken down by industry and region. When one industry features heavily, lenders pay attention.
None of this means lenders stop lending. It means they want to be sure your business isn’t carrying the same problems as the sector.
What are lenders really worried about?
When an industry struggles, the same warning signs tend to appear. business.gov.au lists common warning signs of financial trouble. Lenders look for patterns such as:
- Falling sales across several months.
- Rising costs not passed on to customers.
- Growing debtors as customers pay more slowly.
- Supplier arrears and accounts on stop.
- Tax debt building up, especially PAYG, GST and super.
- Using new debt to pay old debt.
If your business shows none of these — or shows them but has a clear plan — you’re already different from the sector’s problem cases.
Your numbers are stronger than the headlines? Start a short enquiry — no credit check to enquire.
How to show you’re stronger than the sector
Lead with your own numbers. Twelve months of bank statements showing steady income is more persuasive than any explanation.
Show your debtors are paying. An aged debtors report with few overdue accounts tells a lender your customers are sound.
Keep tax current. Up-to-date BAS lodgements and payments — or a formal ATO payment plan if you’ve fallen behind — show you’re managing obligations.
Explain what you’ve changed. Price rises, cost cuts, new customers, new products, a shift away from risky work. Lenders want to see a business that’s adapting.
Have a clear purpose for the money. “Bridge a confirmed contract” or “replace equipment that’s costing us jobs” is stronger than “general working capital”.
Offer security if you have it. Property security gives lenders comfort beyond the business’s trading, often opening options that wouldn’t otherwise exist.
Industry by industry
| Industry pressure | What lenders focus on | What helps |
|---|---|---|
| Construction insolvencies | Contracts, margins, debtors, licence | Fixed-price exposure explained; strong debtors; property |
| Hospitality costs | Wages, rent, takings | Price rises made; wage control; lease strength |
| Tourism disruption | Forward bookings, cash buffer | Diverse markets; bookings; property |
| Commodity downturns | Contract end dates, concentration | Diverse clients; contract pipeline |
| Drought | Income, existing debt, land | Recovery plan; support received; land equity |
Our guides for builders, restaurants, tourism operators and mining services cover each industry’s lender questions in detail.
When borrowing helps — and when it doesn’t
Finance is a tool. In a tough period it can:
- Bridge a temporary gap caused by slow payments or a seasonal dip.
- Fund a change that makes the business more resilient — new equipment, a new product, a new market.
- Consolidate pressure from several short-term debts into something manageable.
It rarely helps to borrow to cover ongoing losses with no plan to fix them. An honest conversation about why you need the money, and how it will be repaid, protects you as much as the lender.
A worked example
Illustrative. A residential builder applies for a $200k facility to bridge progress claims during a period when builder collapses are in the headlines. The lender is cautious.
The builder provides a job schedule showing healthy margins on current contracts (with escalation clauses on the newer ones), an aged debtors report with no overdue claims, current BAS lodgements and a QBCC licence in good standing. They offer a second mortgage over their home.
The lender sees a builder who has avoided the sector’s traps. The facility is approved on property security, structured around the claim schedule.
Illustrative: a café in a quiet patch. A café owner applies for a $35k facility after a slow winter in a suburb where several venues have closed. Her takings dipped but have recovered over the past two months, she raised prices in autumn, and her BAS is current. She explains all three in the enquiry. The lender, reassured that the business has adjusted, offers an unsecured facility sized on her recent banked turnover rather than the weaker months.
The lesson in both cases is the same: the headlines describe the sector, but the application is about you. The more clearly you separate your business from the sector’s problems, the more the lender can focus on your own strengths.
Secured or unsecured in a tough industry?
In a cautious market, property security often makes the difference, from $20k to $5m through first mortgages, second mortgages or caveat loans. Unsecured options — typically $5k to $500k, sized on turnover and bank statements — remain possible for businesses with strong, steady banked income. The secured or unsecured check gives a quick steer.
What to prepare before you apply
In a cautious market, preparation shortens the process and improves the outcome. Before you enquire, gather:
- Twelve months of business bank statements, ideally from every account the business uses.
- Up-to-date management accounts — a profit and loss and balance sheet no more than a couple of months old.
- An aged debtors and aged creditors report, so a lender can see who owes you and whom you owe.
- Your tax position: BAS lodgement history, any ATO debt and any payment plan.
- A one-page plan: what the money is for, how it will be repaid and what you’ve changed in response to conditions.
- Security details if you or a director own property.
A lender who receives this pack sees a business that knows exactly where it stands — which is precisely what they want to see in a tough year.
Talking to your existing lenders and the ATO
If you’re already under pressure, early conversations help. Existing lenders often have hardship or restructuring options, and they generally respond better to a business that raises problems early than one that goes quiet. The ATO offers payment plans for businesses that can’t pay a debt in full, and entering one before the debt escalates keeps more doors open.
When you then approach a new lender, you can show that existing obligations are being managed. That changes the conversation from “is this business in trouble?” to “this business has a plan”.
Signs it’s time for professional advice
Finance isn’t always the answer. If sales have fallen for many months with no sign of recovery, if you’re using new debt to pay old debt, or if tax and super arrears are growing faster than you can pay them, speak to your accountant or a qualified adviser before borrowing more. business.gov.au’s guidance on warning signs is a useful place to start. A good lender or broker will tell you honestly if borrowing isn’t the right move.
Doing well in a hard year? Let’s talk
If your business is holding up while others struggle, it deserves to be judged on its own numbers. A 60-second enquiry is where that starts. There’s no credit check when you first enquire, your details aren’t passed to a crowd of lenders, and a real person will listen to what makes your business different before suggesting anything. Please be accurate and upfront — including about any tax debt — so we can find something that genuinely fits.
Frequently asked questions
Will lenders refuse my business because my industry is struggling?
Not automatically. They'll ask more questions and look more closely at cash flow, tax and security. A business that performs well despite the sector can still borrow.
Where do lenders get information about industry problems?
From their own lending books, industry news and public data. ASIC, for example, publishes insolvency statistics, including external administrators' reports broken down by industry.
Should I borrow during a downturn?
It depends on why. Borrowing to invest in a clear opportunity or bridge a temporary gap can make sense. Borrowing to cover ongoing losses without a plan usually makes things worse. Talk it through honestly.
What if I already have ATO debt?
ATO debt is considered case by case. Tell us about it and any payment plan. Being upfront helps us find options that can work.
Does property security help in a tough industry?
Often. When lenders are cautious about an industry, property security gives them comfort beyond the business's trading. Property-secured business loans run from $20k to $5m.