Your business owes the ATO:
$390,000.
But that’s not the only debt.
There is also:
business loan:
$240,000
equipment finance:
$315,000
vehicle finance:
$145,000
business credit cards:
$65,000.
Total debt:
approximately $1.155 million.
The owner asks:
“Wouldn’t it be easier to put everything into one loan?”
Maybe.
But:
one loan isn’t automatically a better loan.
Debt consolidation can potentially simplify repayments and improve cashflow.
It can also turn:
shorter-term debt,
asset-backed debt,
and tax debt
into one large facility that may remain outstanding for much longer.
Before consolidating anything, I want to know:
what every debt was used for,
what it costs,
how long remains,
what security applies,
and whether there’s actually a problem with it.
Because some of those loans may be doing exactly what they’re supposed to do.
The Busselton Business
Imagine an established Busselton business providing construction, trade and equipment services across the South West of Western Australia.
Trading history:
15 years.
Annual turnover:
approximately $7.6 million.
Employees:
29.
ATO debt:
$390,000.
The business is profitable.
Current work is strong.
But the owner feels like:
“Everyone gets paid before I do.”
Every week or month there is another:
finance repayment,
ATO commitment,
credit-card payment,
supplier payment,
or equipment facility.
The problem isn’t necessarily total debt.
The problem may be:
how the debt is structured.
Start With a Debt Map
Before discussing consolidation, list every facility.
ATO debt
Balance:
$390,000.
Business loan
Balance:
$240,000.
Equipment finance
Balance:
$315,000.
Vehicle finance
Balance:
$145,000.
Business credit cards
Balance:
$65,000.
Total:
$1.155 million.
Now add another column:
What was each debt used for?
The ATO Debt
Historical tax obligations.
The debt arose during:
rapid growth,
customer payment delays,
and a period of high equipment expenditure.
Current tax obligations are now being maintained.
That distinction matters.
The $240,000 Business Loan
Originally:
$400,000.
Used to fund:
working capital
during a major expansion.
Current balance:
$240,000.
Remaining term:
approximately two years.
The business is maintaining it.
Is this loan actually a problem?
Maybe.
Maybe not.
The $315,000 Equipment Finance
This relates to:
two excavators
and
a skid steer.
The equipment is:
productive,
in regular use,
and generating revenue.
The facilities have:
defined remaining terms.
Why would we automatically refinance them?
The $145,000 Vehicle Finance
Four commercial vehicles.
Again:
productive assets.
Existing finance is performing.
No obvious problem yet.
The $65,000 Credit Cards
Now this deserves a closer look.
The cards were originally used for:
fuel,
travel,
small equipment,
and operating expenses.
But balances have remained high.
The business pays them down.
Then uses them again.
That’s potentially revolving expensive short-term debt being used as permanent working capital.
Different issue.
Not All Debt Is Bad Debt
This is where consolidation conversations often go wrong.
The owner sees:
five different liabilities
and thinks:
“Messy.”
But a business can legitimately have different facilities for different purposes.
Truck:
truck finance.
Excavator:
equipment finance.
Property:
property finance.
Working capital:
business facility.
Historical ATO debt:
separate strategy.
The number of facilities isn’t necessarily the problem.
The Problem Is When the Debt No Longer Matches Its Purpose
Credit cards funding long-term working capital?
Potential problem.
Short-term loan funding an asset with a long useful life?
Potential mismatch.
Property-secured debt funding everything the business ever buys?
Potentially unnecessary.
Equipment finance on productive machinery with an appropriate remaining term?
Maybe perfectly reasonable.
Don’t Refinance Good Debt Just to Make the Spreadsheet Look Neat
This is important.
Suppose the:
$315,000
equipment finance has:
three years remaining.
The equipment is expected to remain in the business for:
at least five years.
The repayment is manageable.
Why move it?
There needs to be a commercial benefit.
Consolidation Has to Improve Something
Potential reasons might include:
reducing excessive regular repayment pressure,
replacing unsuitable short-term debt,
simplifying an overly complicated debt structure,
dealing with historical ATO debt,
or creating a more appropriate overall finance structure.
But:
“One repayment sounds easier”
isn’t enough on its own.
What If We Consolidate All $1.155 Million?
Let’s think about what that means.
Potential new facility:
approximately $1.155 million
before considering:
fees,
payout adjustments,
or other transaction costs.
Now the business has one large debt.
Looks tidy.
But what security does it require?
What term?
What cost?
What assets are now behind it?
Perhaps Commercial Property Is Available
The business owns its premises.
Estimated value:
$3.1 million.
Existing commercial mortgage:
$1.05 million.
There appears to be substantial equity.
The owner says:
“Great. Put all the debt against the property.”
Not so fast.
You’re Potentially Moving Asset Debt Onto the Property
The excavators currently support productive work.
Their finance will naturally reduce over its remaining term.
If:
$315,000
of equipment debt is moved into a much longer property-secured facility, the debt may remain outstanding well after the original equipment loan would have finished.
Same With the Vehicles
Vehicle finance:
$145,000.
Suppose only:
30 months
remain.
Why turn that into long-term property debt?
Maybe there’s a reason.
But we need to see it.
A Lower Monthly Repayment Can Hide a Longer Debt
This is one of the biggest consolidation traps.
Existing total repayments feel heavy.
New consolidated repayment looks lower.
Owner says:
“That’s much better.”
Maybe for cashflow.
But how many additional years has the debt been stretched?
Don’t Compare Repayment Without Comparing Term
Facility A:
higher repayment,
shorter remaining term.
Facility B:
lower repayment,
much longer term.
The second facility may feel easier today while costing more over its life.
The actual lender proposals need to be compared.
What About the ATO Debt?
This may be the liability most worth investigating.
Historical balance:
$390,000.
If the existing ATO arrangement is creating substantial cashflow pressure, refinancing that component could potentially change the business’s weekly or monthly position.
But that doesn’t mean the excavators need refinancing too.
Maybe We Consolidate Only the Problem Debts
ATO:
$390,000.
Credit cards:
$65,000.
Potential amount to investigate:
$455,000.
Leave:
equipment finance
and
vehicle finance
where they are.
Now we’re solving:
historical tax debt
and
revolving short-term debt
without disturbing productive asset facilities.
What About the $240,000 Business Loan?
Assess it separately.
Questions:
What is the repayment?
Remaining term?
Cost?
Any early repayment implications?
Security?
Is the repayment causing cashflow pressure?
If the facility is appropriate:
leave it.
If not:
review it.
Don’t Make Consolidation an All-or-Nothing Decision
Possible strategy:
refinance ATO only.
Another:
ATO plus credit cards.
Another:
ATO plus short-term business loan.
Another:
broader consolidation.
The business doesn’t have to choose between:
“refinance nothing”
and
“refinance everything.”
What If the Business Has Eight Different Loans?
Still map them individually.
Maybe six are equipment facilities associated with:
six productive assets.
That’s not necessarily a problem.
The business may simply have a fleet.
Fleet Finance Can Naturally Create Multiple Facilities
Truck one.
Truck two.
Trailer.
Excavator.
Loader.
Vehicles.
Different settlement dates create different facility maturity dates.
That doesn’t automatically mean the business needs consolidation.
What If There Are Four Short-Term Business Loans?
Different situation.
Suppose:
Loan A:
$120,000.
Loan B:
$95,000.
Loan C:
$80,000.
Loan D:
$65,000.
Total:
$360,000.
All have relatively frequent repayments.
The business keeps refinancing one obligation with another.
Now we may have:
a debt-structure problem.
Stacking Finance Can Become Expensive and Difficult to Manage
The business may have accumulated facilities gradually.
One emergency:
$100,000.
Another:
$80,000.
Then:
$150,000.
Each solved an immediate problem.
Collectively:
they may be consuming too much cash.
That’s where a broader restructure may deserve investigation.
Ask Why the Business Needed Each Loan
This is critical.
If every six months the business needs another:
$100,000
to survive,
consolidating the existing loans won’t fix the underlying cause.
Six months later:
another loan may appear.
Maybe the Business Is Structurally Short of Working Capital
Suppose:
average customer payment time:
51 days.
Weekly payroll:
$86,000.
Suppliers:
substantial.
The business may genuinely need:
a permanent working-capital facility
rather than a series of emergency short-term loans.
Consolidate the Past and Fund the Future Properly
That’s a stronger strategy.
Historical unsuitable debt:
restructure where appropriate.
Future cashflow requirement:
fund with an appropriate facility.
Then stop creating emergency debt.
What If the Business Owes the ATO Because of the Existing Loan Repayments?
Interesting.
Suppose the business is paying:
substantial amounts each month
across short-term facilities.
Those payments consume the cash that would otherwise meet:
tax obligations.
Now debt repayments and ATO debt are feeding each other.
That’s a Warning Sign
The business may be:
profitable
but
overcommitted.
A refinance that changes the repayment profile could potentially help.
But only if:
the business generates enough cash overall.
Restructuring Can’t Fix an Unprofitable Business by Itself
Suppose:
business operating loss:
$45,000 per month.
ATO:
$390,000.
Other debt:
$765,000.
Consolidation may temporarily reduce repayment pressure.
But if operations continue losing:
$45,000 every month,
new debt will eventually accumulate.
Appropriate accounting, restructuring or insolvency advice may be required depending on the circumstances.
Our Busselton Business Is Different
Annual turnover:
$7.6 million.
Business profitable.
Current tax obligations:
being maintained.
ATO balance:
historical.
Existing asset finance:
performing.
Credit cards:
persistently high.
That’s a much more targeted restructure.
What If There Is No Property?
Consolidation may still potentially be investigated through commercial finance depending on:
amount,
cashflow,
credit,
business history,
and lender appetite.
But don’t assume:
$1 million+
of unsecured consolidation
will automatically be available.
The structure needs to match lender requirements.
What If the Owners Have Residential Property?
Potentially relevant.
But putting the family home behind:
ATO debt,
credit cards,
vehicles,
equipment,
and business loans
is a major structural decision.
Understand exactly:
what is being secured
and
why.
Don’t Offer More Security Than Necessary Without Understanding It
If the transaction can be appropriately structured without securing:
every available property,
that’s worth considering.
Security should be deliberate.
What If Consolidation Releases $200,000 of Annual Cashflow?
That could be significant.
Suppose existing debt repayments total:
$38,000 per month.
After an appropriate restructure:
$21,000 per month.
Illustrative cashflow improvement:
$17,000 per month
or:
$204,000 per year.
Those are hypothetical figures, not a lender quote.
But that’s the type of commercial impact worth modelling.
Then Ask Where the $204,000 Goes
This is critical.
If the business simply spends the extra:
$17,000 each month,
the restructure hasn’t strengthened the business.
Perhaps that cash should help:
maintain current tax obligations,
rebuild operating reserves,
reduce debt,
or fund planned growth.
Give the cashflow improvement a job.
What If Consolidation Releases Cash but Extends Debt by Seven Years?
Then compare the trade-off.
Short-term cashflow relief:
valuable.
Longer total debt period:
potential cost.
Maybe still worthwhile.
But the owner should know.
What If the Business Plans to Sell in Three Years?
Now long-term consolidation could affect:
sale proceeds,
debt payout,
and transaction planning.
Tell us the business strategy.
Finance shouldn’t be designed in isolation from the owner’s plans.
What If Equipment Will Be Replaced Soon?
Suppose one excavator is due for replacement in:
18 months.
Current finance payout:
$160,000.
Expected trade value:
$210,000.
If we consolidate that debt into property finance today, we may complicate what would otherwise have been a straightforward future replacement.
Another reason not to move asset debt automatically.
What If the Business Wants to Buy More Equipment Next Year?
Existing asset-finance performance may form part of the broader picture when seeking future equipment finance.
Again:
think ahead.
What If the ATO Debt Is $500,000?
The same process applies.
List:
ATO,
property debt,
business loans,
asset finance,
credit cards,
and any other facilities.
Then classify them.
I Like Four Buckets
Productive asset debt
Finance attached to assets that generate business value.
Property debt
Finance associated with property.
Working-capital debt
Facilities supporting timing gaps in operations.
Historical or problem debt
ATO arrears, persistent credit-card balances, unsuitable short-term facilities or other liabilities that need review.
Once the debt is classified, the consolidation decision becomes clearer.
Don’t Treat a $300,000 Excavator Loan Like a $300,000 Tax Debt
Same number.
Different purpose.
Different asset.
Different repayment logic.
Different potential finance structure.
And Don’t Treat Every ATO Debt as Something That Must Be Consolidated
If an existing ATO arrangement is affordable and working, it may be reasonable to continue it.
There needs to be a commercial reason to refinance.
What If the Owner Just Wants Simplicity?
That’s legitimate.
Administration has a cost too.
Managing:
ten repayments,
ten direct debits,
multiple lenders,
and different maturity dates
can be inconvenient.
But quantify the financial trade before paying significantly more for simplicity.
The Best Consolidation May Leave Several Loans in Place
This sounds contradictory.
But imagine:
before review:
eight facilities.
After review:
five facilities.
We refinance:
ATO,
credit cards,
and two unsuitable short-term loans.
We leave:
commercial property,
excavator,
truck,
and vehicle facilities.
The business hasn’t achieved:
one repayment.
But it may have achieved:
a much better debt structure.
That’s the objective.
What Does a Good 12-Month Outcome Look Like?
Historical ATO debt:
resolved or reducing under an appropriate structure.
Current tax:
up to date.
Credit cards:
cleared and no longer carrying permanent balances.
Productive asset finance:
continuing normally.
Operating cash reserve:
improved.
No new emergency short-term loans.
That’s progress.
What Does a Bad Outcome Look Like?
Everything consolidated.
Repayment lower.
Business feels comfortable.
Six months later:
credit cards:
back to $60,000.
New short-term loan:
$100,000.
New ATO debt:
$90,000.
Now the business has:
the consolidation loan
plus
new debt.
The original problem wasn’t fixed.
Don’t Consolidate Debt Without Changing the Behaviour That Created It
If the problem was:
underfunded growth,
slow debtors,
poor cashflow forecasting,
buying assets from cash,
or inadequate tax provisioning,
address that too.
Otherwise:
consolidation creates room
and
the business fills the room with new debt.
Thirty Years in Finance Has Taught Me That Neat Doesn’t Always Mean Better
One loan looks neat.
One repayment looks simple.
But I care more about:
what the debt costs,
what secures it,
how quickly it reduces,
and whether the business can comfortably operate around it.
The structure matters more than the number of direct debits.
If You Owe the ATO and Already Have Several Business Loans, Start With a Debt List
Tell Thrive Broking:
current ATO balance,
whether there is an ATO payment arrangement,
whether required tax lodgements are current,
annual turnover,
trading history,
profitability,
and approximate cash available.
Then list every business debt:
lender,
current balance,
repayment,
repayment frequency,
remaining term if known,
security,
and what the finance was originally used for.
Include:
business loans,
equipment finance,
vehicle finance,
credit cards,
overdrafts,
working-capital facilities,
and property loans where relevant.
Then tell us:
what is actually causing the pressure.
Is it:
too many repayments?
ATO payments?
short-term finance?
credit cards?
slow customers?
growth?
Or simply wanting a cleaner structure?
From there we can investigate whether it may make sense to:
refinance the ATO only,
consolidate selected debts,
restructure a broader group of facilities,
or leave appropriate existing finance exactly where it is.
Because the goal isn’t:
“Put everything into one loan.”
The goal is:
“Put every debt into the structure that makes the most commercial sense.”
Sometimes that means consolidation.
Sometimes it means leaving good finance alone.