Write the exit plan before you sign the loan

Why write the exit down before borrowing?

Because once the money is in your account, the pressure to plan disappears — until the due date arrives. Writing the exit first forces the only question that really matters for short-term finance: where will the money come from to repay this?

It also protects you. If you can’t write a believable exit, that’s valuable information before you’ve paid any fees. Either the loan should be structured differently (longer term, different security, a line of credit), or the need should be met another way. And if you’re a company director, ASIC’s guidance on insolvent trading is a reminder that incurring a debt without reasonable grounds to expect repayment carries real personal risk.

What are the five parts of an exit plan?

1. Source. Where the repayment comes from. There are really only four: selling something, refinancing to another lender, collecting money owed to you, or accumulating surplus from trading. Some plans combine two.

2. Amount. What that source will realistically produce, after costs. A property sale nets less than its price once agent fees, adjustments and the first mortgage are paid. A refinance may approve less than you asked for.

3. Date. When the money is expected — and the latest reasonable date if things run slow.

4. Evidence. What makes the amount and date believable. A signed contract beats a verbal promise; a valuation beats a guess.

5. Fallback. What happens if the source is late or short. A second source, an extension negotiated in advance, or an asset that could be sold.

How does each part look for the main exit routes?

Route	Amount check	Evidence	Typical fallback
Property or asset sale	Net proceeds after costs and existing debt	Listing, appraisal, contract	Price reduction, second property, refinance
Refinance to bank	Likely approved amount	Accountant’s view, bank discussions, financials	Extension while the bank finalises
Money owed (debtor, refund, contract)	Amount due and likelihood of full payment	Invoice history, contract, ATO notice	Partial trading surplus, extension
Trading surplus	Monthly surplus × months	Cash flow forecast, bank statements	Reduce drawings, sell stock, extend

Each route has its own detailed page: refinance to a bank loan, repaying from a sale and repaying from money owed.

Have a need and a rough exit in mind? See what’s possible in about a minute — no credit check applies.

How do you choose the right term around the exit?

Work backwards from the evidence. If your best estimate for the exit is month four and the latest reasonable date is month five, a term of six or seven months gives a buffer. If your best estimate is month nine, a 12-month term is sensible.

Then check the payout rules. A longer term is only a cheap buffer if early repayment saves the unused time-based cost. If the loan charges a minimum period close to the full term, the extra months aren’t a buffer — they’re a cost. Our early repayment page explains how to check.

What should the amount cover?

The full payout, not just the amount borrowed. By the due date you may owe:

• principal still outstanding;
• interest accrued or capitalised;
• any fees added to the balance;
• discharge costs.

If the exit produces only the original loan amount, it’s short. See business loan payout figures for what goes into the final number.

How do you keep the plan on track?

Review it monthly, even for five minutes. Ask:

• Is the source still on track? Any change to the amount or date?
• Has the evidence improved (contract signed, approval received) or weakened?
• Is the buffer still there?

If something slips, act immediately. Early conversations with your lender about an extension are far more productive than last-week ones — see loan extensions and rollovers. The exit strategy builder turns your plan into a month-by-month checklist, and our 90-day exit countdown covers the final stretch.

Illustrative: a written exit plan

Illustrative only. This is what a finished plan looks like for a 9-month loan funding stock and repaid from a combination of trading and a refund:

Source: primary — trading surplus from the October–December peak; secondary — lodged income tax refund. Amount: peak surplus forecast at about $110,000 on a conservative sell-through; refund per lodged return $32,000. Payout at month seven estimated at $128,000. Date: surplus accumulated by end of January (month six); refund expected February. Evidence: last two years’ December trading; supplier invoices; lodged return. Fallback: hold slow-moving stock for autumn, extend by two months if needed (extension cost confirmed in writing before signing).

That’s half a page. It took an hour to write, and it will shape every decision during the loan. The exit strategy builder walks you through the same five parts.

Notice what the plan doesn’t contain: hope. Every line points to something that already exists or can be checked — a lodged return, last year’s sales, a quote for the extension. If any line of your own plan can only be supported by “it should be fine”, that’s the line to work on before signing. It’s also the line a lender will ask about first, so strengthening it early makes the whole application smoother.

Bring your exit plan to the conversation

When you start your enquiry, tell us how you expect to repay. A lending specialist will test the plan with you and suggest a term and structure that give it room to work. There’s no credit check to enquire, and your information stays with the specialist handling your enquiry rather than being circulated to a panel. The more detail you give on the form about your exit, the more useful that first conversation becomes.