Can I get a business loan with ATO debt?
Short answer
Yes, but the field narrows and the price rises. Major banks typically want ATO debt cleared or on a kept payment plan before they lend. Specialist and non-bank lenders commonly lend where the loan pays the ATO out, often at higher rates and with a director's guarantee. A debt listed on your credit file makes it much harder. The borrowing guide covers how lenders assess tax debt.
What business lenders typically look at
- Your ATO integrated client account. Most business lenders ask for it, or for portal access through your accountant. It shows the balance, any plan and whether instalments are being met.
- Lodgement history. Overdue BAS or returns are often a harder stop than the debt itself, because the lender cannot see the true position.
- Whether the debt is managed. A kept payment plan reads as a business dealing with a cash flow issue; arrears with no plan read as a business in trouble.
- Credit file. The ATO can list a business debt of $100,000 or more that is over 90 days overdue and not being managed. When the ATO reports to credit bureaus covers the trigger points.
- Trend. One bad quarter is different from a tax debt that has grown every quarter for two years.
What the loan usually looks like
Where a lender will lend, the loan is often written so the ATO is paid directly at settlement. Unsecured business finance for this purpose tends to be short term and priced well above bank rates; some products cost more than the ATO's own 11.43% general interest charge once fees are included, which defeats the purpose. Secured options, against property or equipment, are cheaper but put those assets behind the tax debt.
Almost every business loan to a small company asks for a personal guarantee from the directors. That deserves a pause. ATO debt owed by a company is the company's, apart from the amounts a director penalty notice can make personal (PAYG withholding, GST and super). A guaranteed loan that pays out income tax or other company debt makes the whole amount personal. Loan vs payment plan compares the cost; this page is about whether the loan is available at all.
ATO debt blocking a business loan?
Get the ATO side sorted so lenders see a managed business. Free and confidential.
Before you borrow into a struggling business
IS THE BUSINESS VIABLE?
Borrowing to pay the ATO only helps if the business can then meet its ongoing tax as well as the new repayment. If it cannot, the loan adds a creditor and a personal guarantee without removing the problem.
Ask the questions a lender will ask, honestly. Can the business pay this quarter's BAS and super on time as well as the loan? Is the ATO debt the result of one event or of a margin that no longer works? If the company may be insolvent, the three tests matter, and options such as small business restructuring can deal with the ATO debt at a fraction of its face value without new borrowing.
This site does not arrange finance, recommend lenders or present rates as offers. A licensed finance broker can tell you which lenders will look at your file; an accountant or restructuring adviser can tell you whether borrowing is the right move.
What to do next
- Get your ATO integrated client account statement and bring every lodgement up to date so the position is clear.
- If the debt is overdue, put a payment plan in place now; it improves the file with most lenders and stops credit reporting.
- Have your accountant test whether the business can carry the loan repayment and ongoing tax before you sign a guarantee.
Related questions
Do business lenders check with the ATO?
Not directly; the ATO does not answer lender enquiries. Lenders instead ask you for ATO statements or portal access through your accountant, read your bank statements for ATO payments, and check the credit bureaus for any ATO listing. Non-disclosure is usually discovered from those sources and treated as a serious breach.
Will an ATO payment plan stop me getting a business loan?
Usually not on its own. Many lenders accept a plan that is being kept, and some prefer it to a lump sum from another lender because it shows the ATO is satisfied. The instalment is counted as a commitment in serviceability, and some lenders want several months of on-time payments before they lend.
ATO debt blocking a business loan?
Get the ATO side sorted so lenders see a managed business. Free and confidential.
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