Behind on commercial rent? Your options before the landlord acts

How rent arrears usually escalate

Overdue commercial rent rarely goes from one missed payment to a padlock. It moves through steps, and each step costs you more options. Knowing the sequence lets you act while the cheap fixes are still on the table.

• Reminder and phone call. The agent chases the payment. No legal weight yet, but it starts a paper trail.
• Formal breach or default notice. A written notice saying which lease term you have broken and, in most cases, how long you have to fix it.
• Bond or bank guarantee. If the lease allows, the landlord claims against your security deposit or calls on the bank guarantee, then asks you to top it back up.
• Guarantors. If a director or family member signed a personal guarantee, the landlord can write to them as well.
• Termination and re-entry. If the breach is not fixed, the lease may allow the landlord to end it and take back the premises. Your fit-out, stock and goodwill stay behind.

Behind on business rent is common and usually a timing issue. But the further down that list you travel, the more it costs to come back.

What the rules say depends on your state and your lease

There is no single national rulebook for commercial lease arrears. Three things decide your position: the lease itself, your state’s property law, and whether a retail leases Act covers your premises.

• New South Wales. The Small Business Commissioner’s retail guide says a tenant who doesn’t pay on time is in breach and that a lease may allow a lockout without warning. It also says a lessor can usually draw on a bank guarantee for a breach, often without telling the tenant first. For retail lease disputes, mediation through the Commissioner is required by law.
• Victoria. The Victorian Small Business Commission offers free preliminary assistance and low-cost mediation under the Retail Leases Act 2003. Landlords generally must give notice before terminating under the Property Law Act 1958, but non-payment of rent is an exception, so the lease and any default notice you receive matter most.
• Queensland. A landlord uses a notice to remedy breach under the Property Law Act 2023. There is no set number of days in legislation for each type of breach, so the period is whatever the notice says. If it isn’t fixed, the landlord may terminate and lock you out. Mediation through the Queensland Small Business Commissioner is generally required before QCAT for retail tenancy disputes.

Whether a retail leases Act applies depends on the type of premises and the lease, so don’t assume you are covered or not covered. The commissioners publish guides, and each state has its own: NSW Small Business Commissioner, Victorian Small Business Commission and the Queensland Small Business Commissioner. Other states have their own regimes, so check yours.

What usually helps before the landlord acts

Landlords generally want rent, not an empty shop. A tenant who is in contact, specific and reasonable is easier to work with than one who goes quiet. These moves tend to work.

1. Call the landlord or agent before the next due date. Don’t wait for the breach notice. Then confirm what you discussed by email so there is a record.
2. Put a dated proposal in writing. “We will pay $X this Friday, then $Y on the first of each month on top of rent until the arrears are cleared on this date.” Specific beats sympathetic.
3. Offer part-payment now. Even a partial payment shows good faith. Ask for confirmation that it is accepted without waiving your obligation to pay the balance.
4. Check the lease for cure rights and notice periods. Know your deadline before anybody tells you what it is.
5. Use the commissioner if talks stall. Mediation is confidential and low cost. The commissioner can’t compel a deal, give legal advice or stop legal action, but a trained mediator often unlocks a conversation that has gone sour.
6. Don’t withhold rent as leverage. It rarely resolves a dispute and can simply produce a breach notice.

If a repayment plan is on the table, check you can really keep to it. Missing the second payment on an agreed plan is worse than never having proposed one.

A typical timeline: week by week

Every lease is different, so treat this as a typical pattern rather than a promise. Your lease and your state’s law set the real dates.

Notice, the speed of each step and the landlord’s rights vary a lot. Some leases let rent default move much faster than this table.

Clear it in one hit with a property-secured loan

If you own property, you may have a quicker way through than months of back-and-forth. Equity is simply what your property is worth minus the loans already registered against it, and lenders lend against a portion of that figure. The exit, meaning how the loan is repaid, matters as much as the equity.

A property-secured business loan runs from $20,000 to $5M and can be funded in as little as 24 hours. We don’t ask for financials or tax returns. The file is assessed on equity and the exit, so a trading slump or a messy credit history doesn’t end the conversation. The median across our book is 36 hours from start to funds.

What a lump sum buys you:

• The escalation stops. Arrears paid in full, a breach can be remedied before the notice period ends.
• The lease survives. You keep your location, your regulars and your renewal options.
• The fit-out stays yours. A cafe, salon or workshop fit-out can be tens of thousands of dollars you can’t take with you.
• Guarantors are protected. A personal guarantee can put a director’s home on the line. Clearing the debt first removes that exposure.
• Bond or guarantee restored. If the landlord has already drawn it, the lump sum covers the top-up too.

Take a cafe owner who is three months behind after a slow winter and knows the spring trade is coming. Clearing the arrears in one payment, with the landlord’s written confirmation that the default is remedied, turns a standoff into a reset. That’s an illustration, not a quote or a promise of approval.

If the landlord has already issued a formal notice and the clock is short, the same loan can be written on a faster track. See emergency business loans for how we work against a deadline, and commercial property finance if the issue is wider than the rent.

No property? The cash-flow route

If you don’t own property, a cash-flow loan may still work. You need an active ABN, at least six months of trading and business bank statements shared through a read-only link. The amount is sized to your turnover, and some loans fund in as little as 2 hours after approval. The median on our cash-flow loans is 24 hours.

This suits arrears in the range of a month or three of rent, rather than a long-running backlog. For a short gap, short-term business loans are built to bridge it. If the shortfall is really a cash-flow pattern, our page on cash-flow gaps explains how lenders read your bank statements.

Paying rent late is often a symptom of something else, like a slow-paying customer or a quiet season. If the rent shortfall sits alongside overdue wages or super, our guide to catching up on unpaid wages and super covers that order of priority. If you’re closed for a stretch, temporary shutdown finance is the relevant page.

When paying the arrears is the wrong move

Paying the arrears is not always the smart answer. It’s a good answer when the business works and the problem is timing. It’s a poor one in these cases.

• The rent was never affordable. If rent takes a bigger slice of sales than the business can carry, a loan clears this month’s arrears and repeats the problem next quarter.
• Trade is falling and not coming back. Borrowing to keep a shop open that loses money every week only moves the loss into the future, and onto your home.
• The lease is close to expiry with no renewal. Spending a big sum to protect a lease you can’t extend is rarely worth it.
• The relocation or exit option is better. A negotiated surrender, an assignment of the lease or a smaller site can leave you with less debt than clearing arrears and staying.

In those cases, the better move is often to negotiate an exit with the landlord, with the commissioner mediating if needed, and keep your borrowing capacity for the next venture. If a termination notice has already arrived, speak to a commercial property lawyer before you do anything else. A loan for legal costs can fund that advice if cash is the barrier.

Find out where you stand in 60 seconds

You don’t need to decide today whether to borrow. You just need to know what’s possible before the landlord’s deadline narrows it. Our 60-second eligibility check shows which lane fits, property-secured or cash-flow, with no credit enquiry and no cost. Have your lease, the notice (if you have one) and the arrears figure to hand, or ring 1300 863 711 and talk it through. For the full picture of how we assess requests, see urgent business loans.

Frequently asked questions