Direct answer
An impaired-credit commercial loan is business-purpose, property-secured finance for borrowers whose credit file carries defaults, judgments or a prior insolvency that would exclude them from standard bank lending. In Australia it is secured by a first or second mortgage, or a caveat, over residential or commercial property, typically funds in two to ten business days, and is arranged through private lenders and specialist funds who assess the whole picture rather than filtering on credit history alone.
Who uses it and why
Credit history tells a story, but bank credit policy often reads only the headline, not the narrative behind it. A director who guaranteed a business loan that failed during a difficult trading period now carries a default that has nothing to do with their current, successful venture. A borrower went through a prior liquidation years ago, has since rebuilt, and is now running a profitable business with genuine equity behind it, but every bank application stalls at the same credit check. A company has judgments recorded from a dispute long since resolved and paid out, yet the record remains visible.
What these borrowers share is a current financial position that is genuinely capable of supporting a loan, obscured by a credit history that a standardised bank policy cannot look past. Lenders active in this category are built specifically to look past the record to the present-day reality — what security is on offer, what the current business or personal financial position actually is, and whether the story behind the impairment makes sense. Typical borrowers are directors and businesses recovering from defaults or judgments, borrowers post-liquidation rebuilding their position, and applicants excluded from bank finance by historical rather than current issues.
The value an intermediary adds here is significant: not every private lender or specialist fund has the same appetite for the same type of impairment, and placing a file with a lender poorly suited to the specific history behind it wastes time and can produce an unnecessary decline. Matching the nature and age of the impairment to a lender genuinely comfortable with it is often the difference between an application that succeeds and one that doesn't.
What lenders look at
Security is the foundation of every impaired-credit file: property type, location, marketability and the equity available, since these lenders are relying more heavily on the asset given the borrower's credit history. Loan-to-value ratios typically extend to 65–75%, and security can include a first or second mortgage, or a caveat, giving flexibility to structure around whatever asset position the borrower actually has.
The story behind the impairment is examined directly rather than glossed over — when did it occur, what caused it, has it been resolved or paid out, and what has changed in the borrower's circumstances since. A default from a decade ago, fully resolved, reads very differently to an active, unresolved judgment, and lenders in this category are set up to make that distinction rather than applying a blanket exclusion. Current financial position — the business's trading performance, the borrower's present income, and the equity available — carries substantial weight, since it demonstrates the borrower's capacity today rather than their history.
Because this is a wide-tolerance product by design, credit history including major defaults, judgments and prior insolvency does not automatically exclude an application — this is genuinely one of the widest-tolerance products in the category. Documentation is typically alt-doc, low-doc or no-doc, reflecting that these borrowers are often also managing complex or recovering financial positions that don't fit a full-doc mould, and the purpose of funds — refinancing an existing facility, working capital, or a broader restructure — is assessed alongside the security and the story.
Typical terms
|
|
| Size |
$50,000 to $10m, subject to lender assessment |
| LVR |
Typically up to 65–75% |
| Term |
Three months to three years |
| Speed |
Indicative funding in 2–10 business days from a complete application |
| Security |
First or second mortgage, or a caveat, over residential or commercial property |
| Pricing |
Priced on risk and security; indicative range on enquiry |
Structures we see most
Post-default refinance. Refinances an existing facility for a borrower carrying a resolved default, typically used to move away from a lender no longer willing to renew, or to consolidate onto better terms once the underlying issue is behind the borrower.
Post-liquidation rebuild facility. Written for a director or business owner who has been through a prior corporate insolvency and has since rebuilt, assessed on the current business's trading strength and the security available rather than the historical event.
Working capital facility for impaired files. Provides business working capital where a defaults history has closed off standard bank finance, secured against available property and structured around the business's genuine current cash flow.
Judgment resolution facility. Structured specifically to clear or resolve a recorded judgment, often as a first step toward a cleaner credit file and, eventually, a return to mainstream bank finance.
Restructure-linked facility. Combines refinancing an impaired position with a broader restructure of the borrower's facilities, used where the credit impairment sits alongside other lenders or debts that need consolidating at the same time.
Family or trust-supported facility. Structured where a related entity or family member's property can support the security position, allowing an impaired individual borrower to access finance the business itself needs, provided the arrangement is properly documented.
Costs and how we're paid
Pricing on impaired-credit commercial loans reflects the security, the nature and age of the credit impairment, and the story behind it, and is quoted on enquiry once a lender has reviewed the full file — no flat rate applies across the product, and pricing here typically sits above equivalent clean-credit facilities to reflect the additional risk being underwritten. Facilities may carry an establishment fee; all costs are set out in the loan offer before a borrower commits.
Solara is remunerated by the lender, the borrower, or both, depending on structure, which may include a commission from the lender and/or a broker fee agreed with the borrower. Any commission or fee is disclosed in writing before an application proceeds.
Process and timing
- Initial scoping call — typically same day. We discuss the credit history openly, the security available, and the current financial position supporting the application.
- Document collection — typically 1–3 business days. Title and security information, credit file details, and evidence appropriate to the doc level.
- Lender matching and submission — typically 1–2 business days. We place the file with the private lenders and specialist funds whose appetite matches the specific impairment and security.
- Approval and offer — typically 2–7 business days.
- Documentation and settlement — typically 2–5 business days once terms are accepted and security is registered or lodged.
Frequently asked
Can I get a business loan with defaults on my credit file?
Yes, often. This is one of the widest-tolerance products in the category, and lenders will consider applicants with major defaults, judgments, or a prior insolvency, provided the security and the story behind the impairment support the application.
What if I've been through liquidation or bankruptcy?
A prior corporate insolvency does not automatically exclude a borrower from this product — lenders assess the current business's performance and the security available, alongside the circumstances and timing of the prior event.
Will I pay a much higher rate because of my credit history?
Pricing generally sits above equivalent clean-credit facilities, reflecting the additional risk, but a strong security position and a clear, resolved story around the impairment can materially improve the terms on offer.
How long does an impairment need to be resolved before I can borrow?
There's no fixed rule — lenders look at whether the underlying issue is genuinely behind the borrower, how it was resolved, and what has changed since, rather than requiring a specific waiting period.
What documentation do I need?
Typically alt-doc or low-doc evidence — BAS, bank statements, or an accountant's letter — reflecting that many borrowers in this category are also navigating complex or recovering financial positions.
Can a company with a judgment recorded against it still borrow?
Often, yes, particularly where the judgment has been paid out or resolved, or where the current business's trading position and available security make a compelling case regardless.
What can this type of loan be used for?
Common purposes include refinancing an existing facility, business working capital, and broader debt restructuring, provided the purpose is business or investment related rather than consumer.
Does the size of the loan I need affect whether I'll be approved?
It affects which lenders are the right fit rather than whether approval is possible in principle — a smaller facility against strong equity is generally easier to place than a larger one, but impaired-credit lenders across the panel cover a wide range of facility sizes.
Is this a path back to mainstream bank finance?
For many borrowers, yes — an impaired-credit facility is often used as a stepping stone, resolving the immediate issue and rebuilding a track record that supports a return to bank finance once enough time and clean trading history has passed.
Related products
Debt restructure & workout loans — the better fit where the impairment sits within a broader, multi-lender restructure rather than a single, standalone facility.
Caveat loans — worth considering directly where speed matters more than a longer-term structure and a fast caveat facility can address the immediate need.
ATO debt refinance — the closer match where the specific impairment driving the need is an outstanding tax office debt rather than a broader credit history issue.