You need:
$150,000
for the business.
But there’s a problem.
The business already owes:
$78,000
to the ATO.
Maybe you’re on a payment plan.
Maybe you’re not.
Maybe the debt has been sitting there for months.
And now you’re wondering:
“If a lender sees the ATO debt, is that the end of the application?”
Not necessarily.
Having ATO debt does not automatically mean every business finance application will be declined.
But it can matter.
A lender may want to understand:
how much is owed,
how the debt arose,
whether required lodgements are current,
whether there is a payment arrangement,
whether that arrangement is being maintained,
whether the debt is increasing,
and whether the business can actually afford the proposed new finance.
The important question isn’t simply:
“Do you have ATO debt?”
It’s:
“What does the ATO debt tell us about the business?”
The Murray Bridge Business
Imagine an established business operating from Murray Bridge.
The business has traded for:
seven years.
Annual turnover:
approximately $1.8 million.
It employs:
six people.
The owner wants:
$150,000
of business finance.
The money will be used for:
equipment,
working capital,
and some business expansion.
Then we discover:
ATO debt:
$78,000.
The owner says:
“I suppose that’s going to kill it.”
Not necessarily.
But I would want the complete picture before approaching a lender.
First Question: What Is the $78,000?
ATO debt isn’t one single category of problem.
The balance might include:
GST,
PAYG withholding,
income tax,
or other tax obligations.
There may also be interest or other amounts associated with the debt.
Before presenting the finance application, establish the current position.
Don’t rely on:
“My accountant said it was around $70,000 a few months ago.”
Get updated information.
Second Question: Are Lodgements Current?
This matters.
A business may owe the ATO but still have its required tax lodgements up to date.
Another business may have:
ATO debt
plus
multiple outstanding BAS or returns.
Those are different situations.
If lodgements aren’t current, the actual tax position may not yet be fully known.
Before investigating finance, speak with your accountant or tax adviser about getting an accurate position.
Third Question: Is There a Payment Plan?
Suppose our Murray Bridge business has an ATO payment arrangement.
Balance:
$78,000.
Payment:
$4,500 per month.
The business has made every scheduled payment for:
seven months.
That tells a different story from:
ATO debt: $78,000
No arrangement
ATO correspondence being ignored
and
the balance increasing every month.
The lender may still have concerns or particular policy requirements.
But the circumstances are not identical.
A Payment Plan Doesn’t Make the Debt Disappear
This is important.
Some business owners say:
“It’s fine. It’s on a payment plan.”
Fine in what sense?
The debt still exists.
The repayment still affects cashflow.
And the business still needs to keep up with its current obligations.
When assessing another finance commitment, the payment arrangement may need to be considered as part of the business’s existing commitments.
Can the Business Afford Both?
Suppose the business currently pays:
ATO arrangement:
$4,500 per month
Existing equipment finance:
$7,200 per month
Business loan:
$3,000 per month
Now the proposed new finance may add:
another $5,000 per month, depending on the structure.
The business may soon have:
approximately $19,700
in monthly finance and ATO-related commitments before considering:
wages,
rent,
suppliers,
insurance,
fuel,
and other operating expenses.
Can it comfortably support that?
That’s the real question.
What If the New Finance Is Being Used to Pay the ATO?
Different application.
Suppose the owner isn’t asking for:
$150,000 of expansion finance.
Instead, they want:
$78,000
to clear the ATO debt.
Now the proposed finance may replace an existing obligation rather than simply sit beside it.
That changes the assessment.
But it still doesn’t automatically mean the transaction makes sense.
Compare the Before and After Position
Before:
ATO debt:
$78,000
ATO payment:
$4,500 per month
After proposed finance:
ATO debt:
potentially $0
New finance:
$78,000
New repayment:
whatever applies to the proposed structure.
Now ask:
Does the business’s monthly cash position improve?
What is the finance term?
What is the total cost?
Is security required?
Has the cause of the tax debt been addressed?
Those questions matter more than simply:
“The ATO is paid.”
What If the Finance Repayment Is Lower?
Potentially useful.
But don’t stop there.
Suppose:
ATO payment:
$4,500 per month
Proposed secured finance:
$1,800 per month
The new repayment looks dramatically easier.
But perhaps the debt is now spread over a much longer period.
And perhaps property is being used as security.
The monthly number has improved.
The overall risk structure has changed.
Understand both.
What If the Finance Repayment Is Higher?
That isn’t automatically wrong either.
Perhaps the business wants to clear the debt over a shorter period.
A higher repayment may still be manageable if:
cashflow is strong,
the term is appropriate,
and the total structure makes sense.
Again:
don’t assess business finance from one number.
Why Did the ATO Debt Happen?
This is where the application becomes much more informative.
Let’s look at several different businesses that all owe:
$78,000.
Business A: Customer Failure
The business lost:
$110,000
when a major customer collapsed.
Tax obligations accumulated during the cashflow shock.
The business has since:
replaced the customer,
returned to profitability,
and reduced the ATO debt.
That’s a specific historical event.
Business B: Rapid Growth
Turnover increased:
from $900,000
to
$1.8 million.
The business added:
employees,
vehicles,
stock,
and operating costs.
Tax money was repeatedly used to fund growth.
The business is profitable but undercapitalised.
Different problem.
Business C: Ongoing Losses
The business loses:
$12,000 per month.
ATO debt increases because there isn’t enough money to pay everything.
Finance won’t fix the underlying loss.
Different again.
Business D: Poor Financial Management
The business is profitable.
Cashflow is adequate.
But tax obligations were not provisioned properly.
Owners took excessive drawings.
The ATO debt grew.
Potentially fixable.
But behaviour needs to change.
Same ATO Balance. Four Different Credit Stories.
That’s why:
“Can I get finance with ATO debt?”
doesn’t have a universal yes or no answer.
The lender is assessing the business, not merely reading the ATO balance.
Is the Debt Increasing or Decreasing?
This can tell us a lot.
Six months ago:
$115,000
Today:
$78,000.
The business has reduced the debt by:
$37,000.
That’s useful context.
Now reverse it.
Six months ago:
$35,000
Today:
$78,000.
The balance has more than doubled.
Why?
If the business is still accumulating new tax debt, adding another loan may simply increase the number of creditors.
What If the Business Is on a Payment Plan but New Debt Is Building?
That’s a warning sign.
The owner may be successfully paying:
$4,500 per month
toward the historical debt.
But another:
$6,000
of new unpaid obligations is accumulating each month.
The apparent payment progress isn’t real progress.
The total position is getting worse.
What If the Business Has Missed an ATO Payment?
Tell us.
Don’t wait for it to emerge during the assessment.
Was it:
one missed payment because a customer paid late?
Several missed payments?
Has the arrangement been cancelled?
Has another arrangement been negotiated?
What is the current position?
The details matter.
What If the ATO Debt Is Very Small?
Suppose:
ATO debt:
$8,000.
Business turnover:
$3 million.
Strong cash position.
No other significant issues.
That may be viewed very differently from:
ATO debt:
$250,000
Turnover:
$600,000
Weak cashflow
and
increasing arrears.
Debt needs context.
What If the ATO Debt Is $500,000?
Again:
context.
A $500,000 tax debt is significant.
But the appropriate assessment depends on:
business size,
profitability,
assets,
security,
existing debt,
cashflow,
and why the debt exists.
Don’t assume a particular dollar amount automatically determines the outcome.
What Does the Lender Want to Understand?
Different lenders have different policies and requirements.
Broadly, when ATO debt is part of the application, the assessment may need to establish:
the amount owed,
current tax position,
payment arrangements,
business performance,
existing commitments,
credit history,
and capacity to meet the proposed finance.
For secured transactions, available security may also be relevant.
Does the Lender Need an ATO Statement?
Potentially.
Depending on the lender and application, documents relating to the tax position may be requested.
That could include information showing:
current balance,
transactions,
payment arrangements,
or other relevant details.
We’ll determine what is required for the particular application.
Don’t Alter Documents
This shouldn’t need saying.
But it does.
If the lender asks for information about ATO debt, provide accurate information.
Don’t:
remove pages,
edit balances,
or try to make the position appear different.
Finance applications need to be based on accurate information.
What About Bank Statements?
They may provide important context.
They can show:
business turnover,
cash movement,
existing repayments,
ATO payments,
and the broader operating pattern.
Depending on the finance pathway, bank statements may form part of the assessment.
What About Financial Statements?
Again, depending on the lender and transaction, financial information may be required.
The lender may want to understand:
revenue,
profitability,
assets,
liabilities,
and debt servicing capacity.
If the latest financials aren’t ready, tell us.
Don’t assume that means the application cannot be investigated.
What About BAS?
BAS information may also be relevant depending on the lender and application.
For some businesses it can provide more recent evidence of turnover than older annual financial statements.
But it may also show the tax obligations contributing to the current debt.
That’s okay.
We want the real position.
What If the Business Has ATO Debt and Bad Credit?
Now there are two issues to understand.
ATO debt doesn’t automatically equal poor credit.
And poor credit doesn’t automatically mean finance is impossible.
But the combination may reduce available options depending on:
severity,
recency,
circumstances,
business performance,
asset,
security,
and lender policy.
Tell us about both.
What If the Director Has Personal Credit Issues?
Potentially relevant depending on the finance structure and lender.
Again:
tell us.
A five-year-old resolved issue may be assessed differently from:
current unpaid defaults,
recent arrears,
or repeated credit problems.
The detail matters.
What If the Business Has Other Loans?
List them.
Don’t focus so heavily on the ATO that you forget:
truck finance,
equipment finance,
overdrafts,
business loans,
credit cards,
merchant advances,
and other commitments.
The lender needs to understand the total debt position.
ATO Debt Plus Multiple Short-Term Loans Can Be a Warning Sign
Imagine:
ATO:
$78,000
Business loan 1:
$55,000
Business loan 2:
$32,000
Credit card:
$18,000
Equipment finance:
$95,000
The business owner asks for another:
$100,000.
Before adding it, I want to know:
why so many facilities exist,
what they’re costing,
and whether the business is repeatedly borrowing to meet normal operating expenses.
More Finance Is Not Always the Answer
Sometimes the correct outcome of an assessment is:
don’t add another loan.
That might not be what the business owner hoped to hear.
But if the business cannot support the proposed debt, finance may make the position worse.
What If the Business Wants Equipment Finance?
This is particularly important because ATO debt can appear while the business is also trying to grow.
Our Murray Bridge operator needs:
$150,000
for equipment.
The equipment could improve productivity and generate additional revenue.
But the business already owes:
$78,000
to the ATO.
We need to understand both.
Don’t Assume Productive Equipment Automatically Justifies More Debt
The owner says:
“The machine pays for itself.”
Show me.
What does it do?
What revenue does it create?
What labour does it save?
What subcontracting cost does it replace?
How much does it cost to operate?
How quickly does it start producing?
Then we can understand the commercial reason.
Maybe the Equipment Actually Improves the ATO Position
Suppose the business currently pays:
$16,000 per month
to subcontract a process.
A new:
$150,000 machine
would bring that work in-house.
Estimated equipment repayment:
perhaps significantly below the existing subcontracting cost, depending on the finance structure.
Now there may be a genuine productivity argument.
That’s worth understanding.
Or Maybe the Equipment Is Just Another Expense
Different machine.
Owner wants it because:
“We’ve always wanted one.”
No new work.
No cost reduction.
No productivity benefit.
ATO debt already increasing.
That acquisition deserves much more caution.
What If the Finance Is for a Truck?
Same principle.
The truck journey we just completed becomes relevant.
Is the truck:
replacement?
growth?
new contract?
first truck?
fleet expansion?
The ATO debt doesn’t erase the commercial logic of the truck purchase.
But it becomes another part of the credit and cashflow picture.
What If the Business Wants Working Capital?
Now I want to know why.
Is working capital needed because:
customers pay slowly?
growth is consuming cash?
seasonality?
a temporary event?
Or because the business regularly runs out of money?
The last one requires deeper investigation.
What If the Business Wants Finance Specifically to Clear the ATO?
Then we analyse the debt-replacement outcome.
Current ATO position.
Proposed finance.
New repayment.
Term.
Cost.
Security.
And most importantly:
whether the business will remain current with new tax obligations after settlement.
Can ATO Debt Be Consolidated With Other Business Debts?
Potentially, depending on the finance structure and lender.
But debt consolidation isn’t automatically beneficial.
Suppose the business consolidates:
ATO debt,
business loan,
credit cards,
and equipment debt.
The monthly repayment falls substantially.
Looks good.
But perhaps short-term debts have been moved into a much longer facility.
Calculate the broader effect.
Don’t Refinance Good Debt Just Because Bad Debt Exists
Suppose an equipment loan:
has a competitive structure,
is nearly paid out,
and relates to a productive asset.
There may be little reason to disturb it.
Debt consolidation should be selective.
What If Property Is Available?
Property security may open different finance options depending on:
equity,
ownership,
loan position,
business circumstances,
and lender requirements.
But property security changes the risk.
Understand what asset is being placed behind the business debt.
Home Equity Isn’t Free Business Money
Suppose the business owner has:
significant equity in their home.
That doesn’t automatically mean:
“Use the house to clear the ATO.”
The decision deserves careful consideration.
A business problem is potentially being secured against a personal asset.
Discuss the implications with appropriate advisers.
What If There Is No Property?
There may still be unsecured or other commercial finance pathways depending on the business and application.
Don’t assume property is mandatory for every ATO-related finance enquiry.
Likewise, don’t assume unsecured finance will always be available.
Murray Bridge Businesses Can Have Uneven Cashflow
Businesses operating around Murray Bridge can work across:
transport,
agriculture-related services,
construction,
trades,
manufacturing,
retail,
and professional services.
Some experience:
seasonal income,
large customer invoices,
equipment costs,
or uneven payment cycles.
That can contribute to periods where cash and tax obligations don’t align neatly.
But local industry conditions don’t explain every ATO debt.
We still need to understand the individual business.
The Best Application Tells the Truth Clearly
An application with ATO debt doesn’t need a dramatic explanation.
It needs an accurate one.
For example:
“The business lost a major customer in 2025, creating a six-month cashflow shortfall. ATO debt peaked at $120,000. The business has since replaced the customer, returned to profitability and reduced the balance to $78,000 under an agreed payment arrangement.”
That’s useful.
Compare it with:
“ATO debt. Not sure why. Need $150k urgently.”
The first gives us something to assess.
Don’t Manufacture a Story
If the real reason is:
the business didn’t provision for tax,
say that.
Then explain what has changed.
Perhaps:
separate tax account established,
accountant now reviews cashflow monthly,
owner drawings reduced,
and tax obligations are being provisioned weekly.
That’s a genuine response to the problem.
What Has Changed?
This is one of my favourite questions in an application involving historical difficulty.
If the business had a problem:
what is different now?
New customers?
Higher margins?
Lower overheads?
Debt reduced?
Better collection process?
Reduced drawings?
More working capital?
New management?
Without change, the same outcome may repeat.
What If Nothing Has Changed?
Then we should be careful.
If the business:
couldn’t pay tax last year,
can’t pay it now,
and has no plan to change anything,
another finance facility may simply delay the next problem.
Don’t Wait Until You Need the Money Tomorrow
If you know ATO debt may affect an upcoming:
truck purchase,
equipment purchase,
working-capital requirement,
or business loan,
tell your broker early.
That gives time to understand the tax position and identify what documents may be needed.
What Should You Send Thrive Broking?
If you have ATO debt and want to investigate business finance, start with:
approximate current ATO balance
whether required lodgements are current
whether an ATO payment plan exists
whether payments are up to date
how the tax debt developed
annual business turnover
how long the business has traded
what other business finance is currently owing
and
what you want the new finance to do.
If the finance is for:
a truck,
machine,
equipment,
or another asset,
send the quote or invoice as well.
If you want the finance to clear the ATO debt, tell us:
whether you want to clear all or part of it
and
what you believe the business can comfortably repay.
From there, we can determine what additional information is needed and investigate whether there are finance options worth considering.
Because owing the ATO doesn’t automatically answer the finance question.
The more useful questions are:
Why is the debt there?
What is happening to it now?
Can the business afford the new finance?
And:
what will be different after the finance settles?
Those answers tell us far more than the words:
“ATO debt.”