Scenario Spotlight: A commercial deal that works on paper – but something doesn’t quite add up. What would you do?

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

Dr Yasmin* runs a busy GP clinic in Glen Waverley in Melbourne’s south‑east. The practice has been operating for several years, with consistent billings, a stable patient base and a growing team.

Her broker came to ORDE with a refinance scenario for a $2 million facility at around 65% LVR, secured against the clinic premises which were not deemed to be specialised and could be used for multiple business purposes. The deal included refinancing an existing major bank loan for $1.5 million, along with an additional $500,000 equity release.

On the surface, it looked like a deal that should work. The business was trading well, the security position was sound and the leverage was reasonable.

There was pressure to move quickly, with Yasmin wanting to refinance before the next repayment.

Her broker had initially explored refinancing with a traditional lender, but as the detail was worked through, it became clear Yasmin’s broader position and use of funds weren’t straightforward to assess within a standard, policy‑led process.

When ORDE began to review this deal, the file noted the additional funds were for ‘business purposes’ but didn’t clearly spell out what the $500,000 was being used for.

An equity release isn’t unusual in a commercial deal – but without a clear purpose, it’s hard to assess risk or understand what the refinance is meant to achieve. As the file progressed, that gap became more apparent, and the deal slowed while the detail was worked through.

* This scenario has been de identified. Every deal is different, and outcomes will vary based on individual circumstances.