Turned down for trade finance? Here’s what lenders are actually looking at
If you have been knocked back for trade finance, the most useful thing to know is that you were probably not assessed on the thing you think you were.
Here is what is actually going on, with the numbers, and what changes the answer.
The real gate is turnover and trading history, and it is published
Most Australian trade finance has a floor, and providers publish it. It is worth reading the actual criteria rather than guessing:
- Octet requires an Australian ABN, profitability in two of the last three financial reporting periods, a minimum annual turnover of $3,000,000, positive balance sheet net worth, and current management and financial accounts.
- Fifo Capital requires a registered Australian business with an active ABN or ACN, at least 12 months of operation, and a minimum annual turnover of $1M for trade finance.
- Earlypay requires an ABN or ACN, invoicing Australian businesses after delivery, and trading for a minimum of 2 years.
If you turn over $900,000 and have been going 14 months, you have not failed an assessment. You did not reach one. That is a different problem with different solutions.
The second gate is security, and it is why the answer often comes down to property
The Reserve Bank has been consistent on this for years. In its September 2018 bulletin on access to small business finance, the RBA noted that banks are reluctant to extend finance without real estate as collateral, and that prudential capital requirements encourage them to seek residential property as security.
The picture has not fundamentally changed. In the RBA’s October 2025 bulletin on small business conditions: one in five SMEs has experienced challenges obtaining finance, with the most commonly cited barriers being lending criteria that are too strict, unsuitable interest rates, long approval times, and requirements for property or personal assets as security. About half of small business loans are still secured by residential property, and new loans secured that way are on average four-and-a-half times larger than those that are not. Unsecured SME lending remains under 5% of the total.
So if you do not own property, or you have already used it, you are competing for a small share of the market — not because your business is weak, but because of how the capital rules work.
The gate nobody talks about: most rejections happen before an application
This is the finding that reframes the whole thing. The Australian Small Business and Family Enterprise Ombudsman’s 2018 report Affordable Capital for SME Growth traced the funnel:
- 46% of enquiries did not progress past the initial conversation
- Of applications that were referred, only 41% were approved
- Net result: fewer than 22.5% of initial enquiries ended in funding
The report made the point that ABS approval-rate data showing roughly 90% success is misleading, because it only counts businesses that got as far as applying. The real filtering happens earlier, in conversations that never become applications.
Practically: if a lender or broker talked you out of applying, you were not declined. You were screened. Those are different, and the second one is more reversible.
What you can change in a quarter
In rough order of impact per hour spent:
- Get your management accounts current. The RBA noted that up to 45% of small businesses do not use accounting software to keep accurate, up-to-date records. If your last reconciled position is nine months old, nobody can assess you — and that reads as risk, not as an administrative gap.
- Separate business and personal finances properly. Mixed accounts are a documented obstacle to assessment. It is unglamorous and it moves the needle.
- Deal with ATO debt explicitly. Undisclosed or inconsistently reported tax debt is one of the specific information problems the RBA identified. A disclosed payment arrangement is assessable. A surprise is not.
- Have the order documented. If you are seeking finance against a specific purchase, a signed supplier contract, a proforma invoice, a specification and an end-buyer or project attached to it changes what can be assessed.
- Know your factory. Where a provider assesses the transaction and not only your balance sheet, information about the supplier is part of your application, not background.
What to do about the threshold itself
Three routes, in order of how often they work:
Ask about the entry-level product. Providers with high thresholds often have a smaller facility for businesses that do not meet the full criteria — Octet, for example, offers OctetExpress for growing businesses that do not meet the full trade finance criteria. It is worth asking specifically rather than accepting the first answer.
Get the transaction assessed, not just the entity. A $150,000 order to a factory with a long delivery record, with an end-buyer attached, is a different risk to $150,000 of general working capital. Some providers can look at it that way. Ask directly whether the order and the supplier form part of the assessment.
Be careful with the fallback. The usual next stop is a general unsecured business loan priced on a factor rate. These are fast and they will often say yes. Before you take one, ask for the total cost in dollars over the full term and compare it against what the order actually earns. Fast and expensive is sometimes right. It should be a decision, not a default.
The question worth asking any provider
Not “will you approve me?” but: “What specifically stopped this from being assessable, and what would need to be different?”
A provider that cannot answer that is not assessing you. A provider that can has told you your next quarter’s to-do list.
Linkwox assesses the order and the factory alongside your business. All applications are subject to assessment; approval is not guaranteed and criteria apply. Third-party criteria quoted above are from those providers’ published websites and are current at the time of writing; confirm directly with the provider. This article is general information only and is not financial advice.
