How to plan the repayment of a short-term private loan

Why the exit comes first

Short-term private finance is often used because something needs to happen now: a settlement, refinance, acquisition or project milestone. The urgency can make the repayment plan feel like a later problem. In reality, the exit is part of the initial credit decision and should be tested before the facility is accepted.

A credible exit identifies the repayment source, the steps required to access it, the people or institutions who must agree, and the time available for delays. It should also explain what happens if the preferred path does not occur on schedule.

Exit by asset sale

A sale exit should start with realistic net proceeds. Allow for existing debt, selling costs, taxes or other liabilities that may affect the amount available. Consider the property's current condition, likely buyer pool and the time required to prepare, market, contract and settle.

A listing appraisal is not a completed sale. If the facility depends on disposal, identify when the property will be listed, who controls that decision and what pricing response will follow if enquiry is weak. A signed contract can strengthen the exit, but settlement conditions and purchaser risk still matter.

Exit by refinance

A refinance exit depends on the future lender's policy and the borrower's position at that future date. Identify the likely lender type, expected valuation basis, serviceability evidence and financial information that will be required.

Then work backwards. If accounts need to be completed, a lease needs to season, works need to finish or a credit issue needs to be resolved, place those events on the timeline. Do not assume that reduced leverage alone guarantees approval.

• What future lender category is expected to refinance the debt?
• Which credit issue is the bridge intended to resolve?
• What documents or trading history will exist by application time?
• What valuation and serviceability assumptions must hold?
• How long should approval, documents and settlement reasonably take?

Exit through project completion or receipts

For a project exit, reconcile the remaining work, cost to complete, contingency and expected completion date. If repayment depends on sales, leasing or contracted receipts, identify what remains conditional and when cash will actually be available rather than merely earned or invoiced.

Completion risk can affect both timing and value. The exit plan should show who will deliver the remaining work, how overruns are funded and whether the facility includes enough capacity for interest and costs through a realistic completion period.

Build a timeline with decision points

Turn the exit into dated steps. Include valuation, information preparation, sale campaign, refinance application, credit approval, legal documentation and settlement. Add decision points before maturity so that a delayed primary exit triggers action while alternatives are still available.

The maturity date is not the date to begin discussing an extension. If an extension may be needed, understand whether it is a contractual right or a fresh lender decision, what conditions apply and what the additional period may cost.

Test the downside case

Reduce the expected sale price, extend the timeline and increase the refinance friction. Then recalculate the amount needed to repay the facility, including additional interest and fees. The exercise is not intended to predict the worst possible outcome; it shows whether a manageable delay could undermine the strategy.

A good exit plan is specific enough to monitor and conservative enough to survive ordinary disruption. If the facility only works when every assumption lands perfectly, the structure needs more time, more equity, a different lender or a different solution.