Quick answer
A default notice tells you what the lender says you've breached — usually missed repayments, an expired facility or a broken covenant — and the date by which you must fix it. The time allowed comes from your loan contract and, for mortgages over land, state property law. Fixing the default or refinancing the loan before that date keeps the lender from enforcing its security.
Key points
- The notice names the default and the date by which it must be remedied.
- The time allowed depends on your contract and, for land, state law.
- Missed repayments and expired terms are usually fixable with money; covenant breaches may need a refinance.
- Refinancing to a lender that suits your situation can cure the default outright.
- Deadline
- The remedy date stated in the notice
- Common causes
- Arrears, expired term, covenant breach
- If not fixed
- Lender may call the loan and enforce security
- Refinance range
- Property-secured $20k – $5m
Tax letters get most of the attention, but a default notice from a lender can threaten more, because it’s often attached to the property that everything else depends on. The good news is that default notices are, by design, a chance to fix the problem. They exist to tell you what’s wrong and give you time to put it right. Used well, that time is enough to change lenders.
What is a default notice actually telling me?
Three things, if it’s written properly:
- What the default is. Missed repayments, an unpaid balloon, a loan that has passed its expiry date, a breach of a financial covenant, unpaid rates on the security property, or another event listed in your contract.
- What you must do to fix it. Pay the arrears, repay the loan, provide information, or restore a ratio.
- The date by which you must do it. This is the number that matters.
The time allowed isn’t the same for everyone. It comes from your loan contract and, where the loan is secured over land, from the notice rules in your state’s property legislation. That’s why our triage tool asks you for the number of days stated on your own notice rather than guessing.
Which defaults are easy to fix, and which aren’t?
| Default type | Typical fix | How funding helps |
|---|---|---|
| Missed repayments | Pay the arrears plus any default costs | Short-term cash-flow funding or a second mortgage can cover arrears |
| Expired loan term | Repay or refinance the whole balance | A refinance with a new lender replaces the old facility |
| Covenant breach (e.g. ratios) | Restore the ratio, or refinance to a lender without that covenant | Private lenders assess on security and exit rather than bank ratios |
| Unpaid rates or insurance on the security | Pay them and show proof | Small amounts; often solvable from cash flow |
| Other debts in default (cross-default) | Deal with the other lender too | A consolidation can clear both |
The trickiest cases are the ones where the business can meet repayments but has tripped a bank covenant because of a single bad year. A bank may be unwilling to move. A private lender looking at equity and a clear exit may be entirely comfortable.
What happens if the date passes?
Once the remedy date passes without a fix, the lender can generally call up the whole loan and move to enforce its security. For property, that can mean taking possession and selling, subject to the process your state requires. Enforcement costs then get added to the debt, and a forced sale rarely achieves the price you’d get on your own terms.
That’s the real case for acting early: every option — refinance, sale on your terms, a negotiated extension — is cheaper before enforcement starts than after.
If you’d like a lender’s view on refinancing before your remedy date, tell us what the notice says. There’s no credit check involved in that first step.
How does a refinance cure the default?
A refinance replaces the lender who issued the notice. The new lender pays out the old loan in full, including arrears and any default charges, and the default disappears with it. What you’re asking the new lender to do is look at the situation differently:
- Security first. Property-secured loans of $20,000 up to $5,000,000, as first or second mortgages or caveat loans, over residential or commercial property.
- The reason for the default. A late-paying major customer, a bad season or a health scare can be explained; a business that’s losing money every month is a harder story.
- The exit. How the new loan will be repaid or refinanced again later — sale of an asset, improved trading, or a move back to a bank once the record is clean.
Where other debts are also behind, a business debt consolidation loan can refinance the defaulted facility and the ATO or supplier arrears in one go.
An illustrative example
Illustrative only. A Perth logistics business receives a default notice after its bank loan reaches the end of its term during a quiet trading year. The bank won’t extend because of a covenant breach. The owners hold equity in the warehouse. A private first mortgage refinances the bank loan before the remedy date, with a 12-month term that gives the business time to post a stronger year and refinance back to a mainstream lender.
What should I do today?
- Read the whole notice and write down the default, the fix and the date.
- Call the lender and confirm the exact payout figure, including default costs.
- Check for cross-defaults in your other facilities — one notice can trigger another.
- Collect refinance documents: the latest loan statement, rates notice, six months of bank statements and recent financials. Our debt rescue document pack lists everything.
- Consider whether the bank is calling in the whole relationship. If so, read what to do when the bank calls in your loan.
Could a refinance fix your default in time?
A default notice is the lender asking you to act. If your current lender can’t give you the room you need, a different lender may be able to. That’s a remedy in the true sense — the business keeps its premises, its equipment and its dignity.
The enquiry takes about a minute and there’s no credit check at the start. Your details go to one team, not a list of lenders who’ll all ring you. A real person reads the notice details and calls you to talk through what’s possible. Please fill in the loan balance, the property and the remedy date accurately, because those three numbers decide what we can do.
Frequently asked questions
How long do I have after a default notice on a business loan?
Look at the notice itself: it should state the date by which the default must be remedied. That period comes from your loan contract and, where the loan is secured over land, from the notice requirements in your state's property law. Don't assume you have the same time as someone else.
Can the lender sell my property after a default notice?
Not immediately. A lender generally has to give proper notice and allow the time required before taking possession or selling. But once that time passes without a remedy, enforcement can move quickly, so treat the remedy date as real.
What if the default is that my loan term has expired?
An expired term is a common trigger with short-term or bank business loans. The fix is usually a refinance with a lender that suits your current situation, rather than trying to catch up arrears that don't exist.
Can I refinance a loan that's in default?
Yes, specialist lenders refinance defaulted loans regularly, especially where there's equity in the property. They'll want to know why the default happened and why the new loan will be repaid.
Can I complain about how my lender is treating me?
ASIC explains that AFCA can help eligible small businesses with complaints about member lenders, but lenders that only make commercial loans aren't required to be AFCA members. Check whether your lender is a member.