Short answer: An unsecured business loan to pay an ATO debt may be possible for some businesses. Whether a lender accepts a tax debt depends on its current policy and assessment. The Instant Business Finance cash-flow lane needs an active ABN, at least 6 months of trading and business bank statements. A separate property-secured lane considers ATO debt.
Key takeaways
- Unsecured cash-flow loans don't use property as security. The loan is sized to the business's turnover.
- How an ATO debt affects a cash-flow application depends on the lender's current policy.
- In the property-secured lane, ATO debt, bad credit and defaults are considered, and overdue lodgements don't stop an application.
- A loan replaces one debt with another. It only helps if the new repayments can come from cash flow.
- All applications are subject to lending criteria, assessment and approval.
How the process works, step by step:
- Run the eligibility check. It takes about 60 seconds online, makes no credit enquiry and costs nothing.
- Choose the lane that fits. The cash-flow lane needs an active ABN, 6+ months of trading and business bank statements shared through a read-only link. The property-secured lane suits owners of residential, commercial or industrial property.
- Assessment. Cash-flow loans are sized to turnover. Property-secured loans are assessed on equity and the exit, which means how the loan gets repaid.
- Credit check, with consent. A credit check happens only if you decide to proceed, and only with your consent.
- Funding after approval. Some cash-flow loans are funded in as little as 2 hours after approval. Property-secured loans can be funded in as little as 24 hours.
How does an unsecured cash-flow business loan work?
An unsecured cash-flow loan is assessed on how the business trades, not on property it owns. "Unsecured" here simply means no property is offered as security for the loan.
The lender looks at the business's trading history and its bank statements. These are shared through a read-only link, so the lender can view the account but can't move money. To qualify for this lane, the business needs:
- an active ABN
- at least 6 months of trading
- business bank statements, provided through the read-only link.
The amount offered is sized to the business's turnover. That means two businesses with the same tax bill could be offered different amounts, depending on how much money flows through each account.
Speed matters when a tax debt is building. Some cash-flow loans are funded in as little as 2 hours after approval. Note the words "after approval". The assessment still has to happen first, and its timing depends on the application.
What do lenders look at when a business owes the ATO?
When a business owes the ATO, lenders look closely at whether it can carry a new repayment on top of its existing commitments. The answer depends on which lane the application goes through.
Cash-flow lane. The loan is sized to turnover, so money coming into the business account is central to the assessment. Any repayments already going to the ATO will show up as part of the business's regular outgoings. Whether an ATO debt affects a cash-flow application depends on the lender's current policy. It can't be assumed either way.
Property-secured lane. The assessment centres on equity in the property and the exit, which means how the loan will be repaid. Bad credit, defaults and ATO debt are all considered, and overdue lodgements don't stop an application. No financials or tax returns are needed.
For general information on tax debts and lodgement obligations, see the Australian Taxation Office's business pages. Our guide Can I get a business loan with an ATO debt? covers this topic in more detail.
Unsecured loan, property-secured loan or ATO payment plan: how do they compare?
These options suit different situations. The main differences are what the assessment rests on and what paperwork is needed.
| Cash-flow (unsecured) loan | Property-secured loan | Dealing directly with the ATO | |
|---|---|---|---|
| Assessed on | Turnover and business bank statements | Equity and the exit (how the loan is repaid) | See ATO guidance |
| Documents typically needed | Active ABN, 6+ months of trading, bank statements via a read-only link | No financials or tax returns needed | See ATO guidance |
| ATO debt or overdue lodgements | Depends on the lender's current policy | ATO debt considered; overdue lodgements don't stop it | See ATO guidance |
| Amount | Sized to turnover | $20,000 to $5M | See ATO guidance |
| Funding timeframe | Some funded in as little as 2 hours after approval | Funded in as little as 24 hours | See ATO guidance |
The property-secured lane offers three structures:
- Second mortgage: a loan secured behind an existing home loan.
- Caveat loan: written in Victoria only. In every other state and territory, the loan settles straight onto a registered second mortgage.
- First mortgage: available if the property has no existing loan on it. This is generally the lowest-cost option.
The ATO publishes its general interest charge (GIC) rate, which applies to unpaid tax. Compare the current published rate with the full cost of any loan. For more on the property route, read Pay an ATO debt with property equity.
Who can it suit, and when is a loan the wrong answer?
A loan can suit a business with steady trading that faces a one-off tax bill and can meet new repayments from its cash flow. It is the wrong answer when borrowing would only delay a deeper problem.
A loan doesn't remove debt. It moves the debt from the ATO to a lender, with its own costs and repayments. Some questions to consider:
- Is the ATO debt a one-off? A large bill after a strong year is different from tax that has built up over many quarters.
- Is there an ongoing cash-flow gap? If the business regularly falls short, a loan may not fix the cause. It could add pressure.
- Would a payment arrangement with the ATO be enough? The ATO sets out its own options for businesses that owe tax. For some businesses, an ATO arrangement alone may cover the gap.
- Has an accountant or registered tax agent looked at the numbers? Professional advice can help clarify the options.
Free general business support is available through business.gov.au. Moneysmart also has general guidance on borrowing. You can also read Pay off your ATO debt, before it escalates.
What should you ask before using finance to pay a tax debt?
Before using finance to pay a tax debt, it helps to understand the full cost and how the loan will be repaid. These questions are a useful starting point:
- What is the total cost of the loan? Look past the repayment amount to the total paid over the life of the loan.
- How will it be repaid? For property-secured loans, the exit is a core part of the assessment.
- What happens if cash flow drops? Think through a quiet month or the loss of a major client.
- What fees and charges apply? Ask for every fee in writing before signing.
- How does the cost compare with the GIC? The ATO publishes its current rate.
- Is the lender regulated for this type of credit? Asking is reasonable.
Moneysmart has general information on understanding loan costs and comparing credit. ASIC's credit resources explain how credit providers are regulated in Australia.
How do you check eligibility with Instant Business Finance?
You can check eligibility online in about 60 seconds. The check makes no credit enquiry and costs nothing.
A credit check happens only later. It needs your consent and only happens if you decide to go ahead. That means you can see which lane may fit before anything appears on your credit file.
Instant Business Finance is a trading name of Company Cash Pty Ltd, ABN 88 673 762 297, and has been lending since 2012. You can call 1300 863 711, Monday to Friday, 9am to 5pm AEST.
IBF's Funding Speed Report covers 5,626 loans funded since 2012. It records a median of 24 hours to funds for cash-flow loans and 36 hours for property-secured loans. These are past figures, not a promise about any future application.
When you're ready, start your application.
This is general information only and does not take into account your objectives, financial situation or needs. All applications are subject to lending criteria, assessment and approval. Fees and charges may apply.
Frequently asked questions
Can I get a business loan if I have an ATO debt?
Possibly. In IBF's property-secured lane, ATO debt is considered, along with bad credit and defaults. The assessment rests on property equity and how the loan will be repaid. In the cash-flow lane, how a tax debt is treated depends on the lender's current policy and assessment. Every application is subject to lending criteria, assessment and approval, so the outcome depends on the business's circumstances.
Do I need property to get a loan to pay a tax debt?
No. The cash-flow lane does not use property as security. It needs an active ABN, at least 6 months of trading and business bank statements shared through a read-only link. The loan is sized to turnover. Owners of residential, commercial or industrial property can also apply through the property-secured lane, where ATO debt is considered.
Will checking my eligibility affect my credit file?
The 60-second online eligibility check makes no credit enquiry, and there is no cost to apply. A credit check happens only at a later stage. It needs your consent and only happens if you choose to proceed. You can see which lane may fit before any enquiry is made, and decide then whether to continue with a full application.
Can I apply if I have overdue tax lodgements?
In the property-secured lane, overdue lodgements don't stop an application. No financials or tax returns are needed. That lane is assessed on property equity and the exit, which means how the loan gets repaid. For the cash-flow lane, the effect of overdue lodgements depends on the lender's current policy. The ATO explains lodgement obligations on its business pages.
Is a loan better than an ATO payment plan?
There's no single answer. It depends on the business's cash flow, the size of the debt and the full cost of each option. A loan replaces the tax debt with a new debt that has its own costs. The ATO charges the general interest charge on unpaid tax and sets out its own payment options. An accountant or registered tax agent can help weigh up the choice. Ready to take the next step? Check your eligibility to see whether a cash-flow or property-secured loan may fit your situation. For the cash-flow lane, have your ABN and online banking login ready. For the property lane, have your property details handy. It takes a few minutes to start, and eligibility depends on the lender's assessment. No obligation. Eligibility is subject to assessment. This is general information only and does not take into account your objectives, financial situation or needs. All applications are subject to lending criteria, assessment and approval. Fees and charges may apply.
Does it cost anything to apply?
No. There's no cost to apply or check your eligibility. All costs are set out in writing in your loan offer before you sign anything.
Will checking my eligibility affect my credit score?
No. Our 60-second eligibility check doesn't make a credit enquiry. A credit check is only done later, with your consent, if you decide to proceed.
