You need:
$350,000 in business finance.
Your business owes the ATO:
$285,000.
The business has traded for:
11 years.
Annual turnover:
approximately $5.8 million.
It’s profitable.
There is work booked.
Customers are paying.
So you ask:
“What do I actually need to give the lender?”
That’s the right question.
Because when a business has ATO debt, the finance conversation isn’t only about:
how much do you want to borrow?
A lender may also want to understand:
how the ATO debt arose,
whether the tax position is known,
whether required lodgements are current,
whether the debt is increasing or reducing,
whether an ATO payment arrangement exists,
whether that arrangement is being maintained,
and whether the business can afford the proposed finance.
The stronger the story can be supported by actual information, the easier it is to understand the transaction.
The Ulverstone Business
Imagine an established contracting, fabrication and equipment-services business based in Ulverstone and working with commercial customers across northern Tasmania.
Trading history:
11 years.
Annual turnover:
approximately $5.8 million.
Employees:
22.
ATO debt:
$285,000.
Existing equipment and vehicle finance:
approximately $620,000.
Debtors:
approximately $940,000.
Finance required:
$350,000.
The owner wants to:
deal with the historical ATO position
and
retain enough working capital to operate comfortably.
The owner says:
“The business is good. Can’t the lender just look at the bank statements?”
Sometimes bank statements form part of an assessment.
But they don’t necessarily tell the whole story.
Start With the Most Basic Question
How much do you actually owe the ATO?
That sounds obvious.
It isn’t always.
The owner says:
“About $285,000.”
About?
We need to establish the position more clearly.
Is $285,000 the Current Balance?
Or is it:
the balance from last month?
Before another BAS?
Before another payment?
Before another lodgement?
Before interest or other amounts?
If we’re discussing finance to address tax debt, the amount needs to be understood as accurately as possible.
Don’t Size a $300,000 Loan Around a Guess
Suppose the owner thinks:
ATO debt:
$285,000.
Then outstanding lodgements are completed.
Actual position becomes:
$345,000.
Now the proposed:
$300,000
facility doesn’t solve the problem it was intended to solve.
The business may settle the loan and still have:
$45,000+
remaining with the ATO.
That’s not necessarily fatal.
But it should be known before the transaction is structured.
First Document: Current ATO Information
Depending on the transaction and lender, relevant information may include evidence showing:
the current ATO balance,
tax accounts,
payment arrangement details,
and whether required lodgements are current.
Exactly what is requested will vary.
The important thing is:
know the tax position.
Second Question: Are the Lodgements Up to Date?
Imagine the business owes:
$285,000.
But also has:
two BAS lodgements outstanding.
Now the lender doesn’t necessarily know whether:
$285,000
is the complete liability.
The missing lodgements could materially change the position.
Outstanding Lodgements Create Uncertainty
The business may say:
“They’re nearly finished.”
Good.
But if the purpose of finance is to address ATO debt, it may be useful to establish the liability before finalising the amount required.
Your accountant or tax adviser may need to assist.
Low-Doc Doesn’t Mean Nobody Cares About the Tax Position
This is important.
A business owner may hear:
low-doc finance
and think:
“Great. I don’t need to explain anything.”
That’s not what low-doc should mean.
Documentation requirements can vary substantially between lenders and products.
But a known:
$285,000
ATO liability remains relevant to the overall financial position.
Now Ask: Why Did the Debt Arise?
The answer matters.
Not because we’re trying to judge the business owner.
We’re trying to understand whether:
the problem is historical
or
still happening.
Scenario One: Historical Growth Pressure
Turnover increased:
$3.9 million
to:
$5.8 million.
Employees increased.
The business bought equipment.
Customers stretched payment times.
ATO debt accumulated during the expansion.
Today:
current tax obligations are being maintained.
Historical balance:
reducing.
That’s one story.
Scenario Two: The Debt Is Still Growing
ATO six months ago:
$190,000.
Today:
$285,000.
New tax obligations continue falling behind.
Now the lender may reasonably ask:
“What changes after we provide finance?”
If nothing changes, the business could end up with:
new finance
plus
new ATO debt.
That’s Why the Direction of the Debt Matters
Current balance:
important.
Trend:
also important.
Is it:
reducing,
stable,
or
increasing?
Show the Lender What Changed
Perhaps the business:
reduced debtor days,
stopped buying equipment from cash,
improved margins,
lost an unprofitable contract,
reduced owner drawings,
or introduced better tax provisioning.
Those changes can help explain why the historical problem may not simply repeat.
What If There Is an ATO Payment Arrangement?
Tell us.
Don’t hide it.
We need to understand:
current balance,
repayment amount,
repayment frequency,
whether payments are current,
and whether the arrangement is manageable.
Suppose the Business Pays the ATO Weekly
Historical balance:
$285,000.
Regular ATO payment:
$3,000 per week.
Annual cash commitment at that rate:
approximately $156,000.
That’s substantial.
If the business is considering refinancing, one of the questions becomes:
what happens to cashflow under the proposed alternative?
Don’t Compare Only Interest Rates
Suppose the business owner says:
“What’s the rate?”
Important question.
But also ask:
What is the repayment?
How often?
For how long?
What security?
What fees?
What is the total cashflow effect?
The structure matters.
Now We Need to Understand the Business Itself
ATO information explains:
the tax liability.
It doesn’t prove:
the business can afford finance.
So next:
business financial information.
What Might Be Relevant?
Depending on lender and transaction, this could include some combination of:
financial statements,
tax returns,
BAS,
business bank statements,
management accounts,
cashflow information,
and accountant-prepared information.
Requirements vary.
The Numbers Should Tell a Coherent Story
Suppose financial statements show:
Revenue:
$5.8 million.
Operating profit:
$640,000.
That’s encouraging.
But bank statements show:
regularly overdrawn account,
multiple dishonours,
and persistent cash shortages.
We need to understand why.
Profit and Cash Are Different
Maybe:
$940,000
is sitting in debtors.
Maybe the business has:
large inventory.
Maybe assets were bought from cash.
Maybe customers pay slowly.
The lender may need enough information to understand how accounting profit becomes available cash.
Bank Statements Can Be Extremely Revealing
They can show:
customer receipts,
payroll,
existing finance repayments,
ATO payments,
supplier payments,
cash balances,
and account conduct.
Again, lender requirements vary.
But from a broker’s perspective, bank activity can help us understand what is actually happening.
What Would Concern Me Before We Even Submit?
Repeated:
dishonours,
unexplained short-term loans,
constant transfers between accounts just to cover payments,
large unexplained withdrawals,
or rapidly increasing ATO debt.
That doesn’t automatically mean finance is impossible.
It means:
we need to understand it.
Explain Before the Lender Has to Guess
Suppose there are:
three dishonoured payments
in two months.
Why?
If one major customer paid:
$220,000
two weeks late,
show us.
That’s different from:
the business simply being unable to meet normal commitments every month.
Now List Existing Finance
This is critical.
The Ulverstone business has:
equipment finance:
$390,000.
Vehicle finance:
$150,000.
Business facility:
$80,000.
Total:
$620,000.
We need the repayments too.
A Balance Without a Repayment Doesn’t Tell the Whole Story
A:
$300,000
loan over a longer appropriate term
can create a very different cash commitment from:
$300,000
of short-term finance.
Tell us:
balance,
repayment,
frequency,
and remaining term if known.
Include Credit Cards
Business card limit:
$80,000.
Balance:
$62,000.
Don’t forget it.
Include Overdrafts and Working-Capital Facilities
Even if:
unused.
A lender may need to understand existing commitments and available facilities.
Include Asset Finance
Truck.
Ute.
Excavator.
Forklift.
Trailer.
Machinery.
If there is finance attached to it:
list it.
Now Tell Us What the New $350,000 Is For
This sounds basic.
But:
“I need $350,000”
is not a purpose.
Is it:
ATO refinance?
Working capital?
Equipment?
Debt consolidation?
Contract mobilisation?
A combination?
Purpose Changes the Finance Conversation
Suppose:
$285,000
is for the ATO.
Remaining:
$65,000
is for working capital.
That’s different from:
$350,000
entirely for working capital
while the:
$285,000
ATO debt remains in place.
What If the Business Wants $500,000?
Then explain the additional:
$215,000.
Maybe:
ATO:
$285,000.
Credit cards:
$65,000.
Working capital:
$150,000.
Total:
$500,000.
Now the request has a structure.
Don’t Add a $200,000 Buffer Just Because It Would Be Nice
If the business needs working capital, quantify it.
What creates the requirement?
Payroll?
Customer terms?
Contract mobilisation?
Seasonality?
Inventory?
Show the logic.
The Debtor Ledger May Matter
Current debtors:
$940,000.
That’s substantial relative to the business.
Provide:
debtor ageing,
major customer balances,
and payment terms
where relevant.
Suppose $420,000 Is Owed by One Customer
That’s useful information.
The lender may want to understand customer concentration and the timing of receipts.
It also helps us determine whether:
debtor finance
could potentially be relevant.
What If the Ledger Is Beautiful?
Current:
$620,000.
31 to 60 days:
$270,000.
61 to 90:
$45,000.
90+:
$5,000.
That’s a very different cashflow picture from a ledger containing:
$400,000
more than 90 days overdue.
A Debtor Ledger Can Support the Business Story
It may demonstrate:
real completed work,
commercial customers,
expected future receipts,
and payment behaviour.
But it can also expose:
concentration,
disputes,
and overdue amounts.
That’s why we want the actual information.
Contracts Can Matter Too
Suppose the business recently won:
a three-year commercial contract.
Expected annual revenue:
$1.6 million.
The business needs finance partly because it has to mobilise:
staff,
vehicles,
and equipment.
A copy or appropriate evidence of the contract may help explain:
why finance is required
and
where future revenue is expected to come from.
Don’t Say “We’ve Got Heaps of Work”
Show it where appropriate.
Contracts.
Purchase orders.
Forward bookings.
Invoices.
Historical turnover.
Actual information is stronger than:
“Business is booming.”
What If Turnover Is Falling?
Don’t hide that either.
Suppose:
last year:
$6.4 million.
Current annualised:
$5.8 million.
Why?
Maybe the business deliberately exited:
a low-margin $900,000 contract.
Profit actually improved.
That’s important context.
Revenue Down Doesn’t Automatically Mean Business Worse
Likewise:
revenue up
doesn’t automatically mean:
business better.
The lender may be interested in:
capacity to repay.
Profitability and cashflow matter.
What About Security?
Depending on the proposed facility, the lender may ask about:
business assets,
equipment,
commercial property,
residential property,
or other available security.
Not every transaction requires the same security.
If Property Is Involved, Be Ready With the Basics
Property address.
Ownership.
Estimated value.
Existing mortgage balance.
Current lender.
Property type.
Don’t just say:
“I’ve got plenty of equity.”
Equity Doesn’t Equal Approval
Property value:
$1.8 million.
Mortgage:
$650,000.
There may appear to be substantial equity.
But the lender still needs to consider:
the borrower,
the business,
the purpose,
serviceability,
and its own credit criteria.
What If the Business Owner Doesn’t Want to Use Property?
Tell us upfront.
That helps narrow the investigation.
Perhaps unsecured options can be considered.
Perhaps they can’t support the amount required.
Better to know the constraint at the beginning.
Credit History May Matter
If there are:
defaults,
judgments,
late payments,
or previous financial difficulties,
tell the broker early.
Again:
the objective isn’t judgment.
It’s structuring the transaction accurately.
Surprises Late in an Application Waste Time
The owner says:
“Everything is clean.”
Later:
a historical default appears.
Now the transaction may need to be reassessed.
It’s much easier to understand the issue at the beginning.
The Same Applies to ATO Enforcement Activity
If there are:
formal notices,
recovery action,
or other significant developments,
tell your accountant, tax adviser, lawyer or broker as appropriate.
Don’t assume finance automatically stops every process.
Urgent tax or legal matters may require specialist professional advice.
What If You Don’t Have Final Financials Yet?
That doesn’t necessarily mean:
do nothing.
Depending on the transaction, we may be able to start by understanding:
ATO position,
bank activity,
BAS,
management accounts,
existing debt,
and available information.
Then determine what else may be required.
Don’t Spend Two Weeks Collecting Random Documents
Start with:
the transaction.
Then work backwards.
What are we trying to achieve?
How much?
Why?
What does the lender need to assess that?
The Broker’s Job Isn’t to Create a Giant PDF Folder
It’s to understand:
the business
and
the finance requirement.
Documents should support that understanding.
What If the Accountant Is Still Finalising the Numbers?
Tell us.
Perhaps we can speak about what is available now and what will follow.
But don’t present:
unfinished numbers
as final.
Consistency Matters
Suppose the owner says:
turnover:
$6.5 million.
Financial statements show:
$5.8 million.
Bank activity suggests something else.
Maybe there is a simple explanation:
$6.5 million is current annualised turnover.
Fine.
Explain it.
Don’t Make the Lender Work Out the Story
A strong application should make the commercial logic understandable.
For example:
“The business has traded for 11 years. Turnover is approximately $5.8 million. Historical ATO debt of $285,000 arose during expansion and slower customer payments. Current obligations are being maintained. The business seeks $350,000 to address the historical tax position and retain an appropriate working-capital buffer. Existing equipment finance is performing and the business remains profitable.”
That’s a coherent starting point.
Then:
support it.
What If the Numbers Don’t Support the Story?
Then change the story.
Not the numbers.
Maybe the business isn’t ready for the proposed finance.
Maybe the amount needs to reduce.
Maybe the existing ATO arrangement should remain.
Maybe another strategy is more appropriate.
A Decline Isn’t the Worst Outcome
The worst outcome can be:
borrowing money the business can’t comfortably repay.
If the numbers don’t work:
understand why.
What Would Make Me More Comfortable With a $285,000 ATO Debt?
Not one magic document.
I’d want to understand things such as:
Is the business profitable?
Are required lodgements current?
Is the ATO balance known?
Is it reducing or increasing?
What caused it?
What has changed?
Can the business afford the proposed repayment?
What other debt exists?
What cash will remain after settlement?
What Would Concern Me?
ATO debt growing rapidly.
Outstanding lodgements that could materially increase the liability.
Multiple recent emergency loans.
Regular dishonours.
No clear explanation for the tax debt.
No working-capital buffer after settlement.
And:
a plan that assumes another loan will somehow fix everything.
The Finance Should Produce a Different Business Position
Before finance:
ATO:
$285,000.
Cash:
tight.
Working capital:
inadequate.
After finance:
what changes?
If the answer is only:
“ATO becomes zero”
but cash remains:
tight,
we may not have solved enough.
Maybe the Correct Amount Is $400,000
Perhaps:
ATO payout:
approximately $285,000.
Working-capital requirement:
$115,000.
Potential finance requirement:
$400,000.
That may make more sense than:
$285,000
if the additional working capital is genuinely required and supportable.
Or Maybe the Correct Amount Is $200,000
Perhaps the business can contribute:
$85,000
from genuine surplus cash.
Now:
finance requirement:
$200,000.
Again:
size the transaction around the business.
Good Preparation Can Save Time
If you’re approaching a broker with substantial ATO debt, have the basics ready.
Not because every lender will request every document.
Because it helps us understand the situation quickly.
Start With These Numbers
ATO balance.
ATO payment arrangement if applicable.
Annual turnover.
Approximate profit.
Cash available.
Debtors.
Existing business debt.
Required finance amount.
Purpose.
Then Have Supporting Information Available
Depending on the transaction, that may include:
ATO information,
BAS,
financial statements,
tax returns,
bank statements,
management accounts,
debtor ledger,
existing finance statements,
contracts,
and property information.
Requirements vary.
Don’t Wait Until You’re Desperate
If the business has:
$285,000
of ATO debt
and
cashflow is becoming tighter,
start the conversation before:
payroll is at risk,
ATO arrangements fail,
suppliers stop extending terms,
or emergency funding becomes the only option being considered.
If Your Business Owes the ATO and You Want Finance, Start With the Story Behind the Number
Tell Thrive Broking:
how much you owe the ATO,
how the debt arose,
whether it is increasing or reducing,
whether required tax lodgements are current,
whether you have an ATO payment arrangement,
and what you’re currently paying.
Then tell us:
annual turnover,
trading history,
profitability,
existing finance,
debtor position,
cash available,
and what you want the new finance to achieve.
From there, we can identify what information may be required and investigate whether:
ATO debt finance,
working-capital finance,
debt consolidation,
property-secured finance,
or another commercial funding structure
may be appropriate.
Because a lender isn’t only looking at:
“Does this business owe the ATO $285,000?”
The bigger question is:
“What is the business’s financial position, why did the debt arise, and does the proposed finance leave the business in a stronger and sustainable position?”
The clearer we can answer that, the better the finance conversation can be.