Quick answer
If an ATO, BAS or supplier debt is overdue, a secured loan of $20,000 to $50,000 can clear it quickly, often in as little as 24 hours once approved. It works best when you compare it with a payment plan and are sure you can repay the loan.
Key points
- Clears the debt in one go, so the pressure stops.
- Compare with an ATO payment plan before you borrow.
- Secured on property, no cash flow evidence needed.
- Up to three months prepaid interest, then weekly repayments.
- Typical use
- ATO or BAS debt, supplier invoices, rent or wages arrears
- Loan size
- $20,000 to $50,000
- Speed
- As little as 24 hours once approved
- First step
- Check what a payment plan would offer
An overdue debt is more than a number. An unpaid BAS means interest and penalties building. An overdue supplier invoice means stopped deliveries. Rent in arrears means a landlord’s letter, and late wages mean staff who are justifiably angry. Each one gets harder to solve the longer it sits.
Start with the cheapest option
Before borrowing, find out what the creditor will agree to. The ATO offers payment plans in many cases, and you should lodge your returns and statements on time even if you cannot pay in full, because it keeps your options open. Suppliers and landlords will often agree a short arrangement if you call before the deadline, not after it.
A loan is worth considering when:
- a plan is not available, or the terms would not work for the business;
- the creditor is about to take firmer action;
- you want the debt gone so you can trade without it hanging over you; or
- several debts are overdue at once, and one loan can clear all of them.
How a secured loan clears an overdue debt
We write loans of $20,000 to $50,000 on property you or a director own, to 80% residential or 70% commercial value, less what is owed. A formal valuation is not needed to begin, cash flow evidence is not asked for, and funding can happen in 24 hours once approved.
Interest for up to the first three months can be prepaid, and after that you repay weekly. That matters here: overdue debts usually mean cash is already tight, and a breathing space before the first repayment gives you room to recover.
Which debts businesses clear this way
- ATO and BAS. GST, PAYG withholding and other tax debts.
- Suppliers. Overdue invoices that have stopped deliveries or put a trade account on hold.
- Rent and leases. Arrears before a landlord acts.
- Wages and super. Back pay for staff, and superannuation owed.
- Other lenders. Cash flow loans that are debiting daily and squeezing the account. See consolidating cash flow loans.
A worked example
A construction subcontractor has a $38,000 BAS debt and two overdue supplier accounts totalling $9,000. The ATO has asked for payment, and one supplier has stopped deliveries. A payment plan for the ATO is possible but would not release the supplier. The director owns a home worth about $900,000 with a $300,000 mortgage. A secured loan of $47,000 clears both debts in a day or two, the supplier restarts deliveries, and weekly repayments begin after the prepaid interest period. The figures are illustrative, not an offer.
If you are unsure which debts to clear first, an accountant can help you prioritise. Tax and wages usually come first because the consequences of leaving them are the most serious.
What can go wrong
A loan that pays a debt does not fix the reason the debt arose. If the business is loss-making, or the tax is missed again next quarter, you have added a loan to the problem. Ask honestly: what changed, and what will stop this happening again? Setting tax aside weekly, lodging on time and talking to an accountant all help.
Also remember that borrowing against your property puts it at risk if the loan is not repaid. Read the contract. Ask about every fee and what happens if a payment is missed. The ASIC guide to unfair contract terms is useful reading.
Talk to the creditor as well
Borrowing is rarely the only conversation worth having. Call the ATO, supplier or landlord, tell them you are arranging funds and give a date. Creditors respond better to a plan than to silence, and a short delay agreed in advance can take the pressure off while the loan is arranged. Keep a note of who you spoke to and what was agreed, and confirm any arrangement in writing where you can.
Once the debt is cleared, ask for confirmation that the account is up to date. For tax, check your online account shows the payment, and keep the receipt with your records.
Keep records
Whichever route you take, keep a folder with notices, payment confirmations and the loan documents. It helps your accountant, and shows future lenders you are organised.
Getting started
The application form asks about the amount, the debt, your security and your business. Choose “up to $50,000”, and a person will call. We do not provide tax or legal advice, and lending is subject to assessment.
Frequently asked questions
Can I borrow to pay the ATO?
Yes, many companies use a secured loan to clear an ATO debt. Check first whether a payment plan would cost less.
Should I use a payment plan instead?
It may be cheaper for smaller debts and you may qualify. A loan can make sense when you want the debt gone quickly or a plan is not available.
Can the loan pay the creditor directly?
In many cases funds can be paid to the creditor at settlement. Ask when you apply.
What if I owe more than $50,000?
The application has a second path for larger amounts, with a few extra questions.
Will this help if I have bad credit?
Credit is considered but not decisive for a secured loan. Equity in the security matters more.