A seemingly solid business contributing to servicing - would this refinance proceed?

Scenario Spotlight is designed to build your skills by putting you in the credit role. You work through a real, complex scenario, make your own call, then see how your peers voted and how ORDE’s Credit team ultimately viewed the deal.

Tom* runs an established construction business in Sydney’s west. Like a lot of small business owners, his focus is on keeping things moving – contracts, staff and cash flow.

Tom was looking to refinance using a property he owned as security. At the time, servicing relied on Tom’s business income.

His broker brought a refinance to ORDE after it became clear the deal wasn’t progressing as expected elsewhere. The business itself was sound, but the way the income stacked up on paper meant the application couldn’t move forward in its original form.

During our assessment, it became clear there was more to the story. While Tom is actively involved in tbe business day‑to‑day, he isn’t the sole owner. He holds a 50 per cent interest in the business, with the remaining 50 per cent owned by his wife, who wasn’t included as a loan applicant.

This is a scenario many brokers will recognise. On the surface, it looks straightforward. But once income attribution becomes unclear, it’s the kind of deal that can stall quickly with a traditional lender.

When servicing was assessed using only Tom’s attributable share of income, the numbers didn’t quite work. At that point, the deal wasn’t declined, but it couldn’t proceed as structured.

* This scenario has been de‑identified.