Business debt consolidation: replace daily debits, ATO debt and creditors with one secured loan

How businesses end up with stacked debt

It usually starts with one unsecured cash flow loan to cover a slow month. The repayments come out every day or every week. A few months later cash is tight again, so a second lender tops it up. Then a third. Meanwhile the BAS slips, the ATO debt grows and suppliers move you to cash on delivery. Before long a large share of every day's takings goes straight back out in debits before you have paid wages or rent.

This is one of the most common situations we see, and it is fixable. The key is to replace several expensive, frequent repayments with one secured facility that gives the business breathing space.

What a business debt consolidation loan does

A business debt consolidation loan pays out multiple debts at once and replaces them with a single loan. Equity Tap lends from $50k to $5m for one to twelve months, secured by a first or second mortgage or caveat over Australian residential or commercial property. Interest can be paid monthly as interest only, or interest for up to the first six months can be prepaid or added to the loan, so there are no scheduled payments in that period.

That means the daily and weekly debits stop on settlement day, the ATO is paid or brought up to date, and pressing creditors are cleared, all from one loan with one payout date.

Before and after

What can be consolidated

• Unsecured business loans and merchant cash advances with daily or weekly repayments.
• ATO debt, including payment plans that have fallen behind. See ATO tax debt business loans.
• Trade creditors and suppliers.
• Equipment finance arrears.
• Short-term private loans that are expiring. See refinance an expiring private loan.
• Business credit cards and overdrafts.

Why banks and cash flow lenders often can't help here

A bank looks at your bank statements, sees the daily debits and ATO debt, and declines. A cash flow lender sees the same thing and either declines or offers another stacked loan, which makes the problem worse. If you have already been knocked back, see declined by a cash flow lender and messed around by a cash flow lender.

We approach it differently. We don't need bank statements, tax returns or BAS for a property-secured loan. There is no credit check at initial assessment, and defaults, ATO debt or a past decline are not automatically a problem. We look at the equity in the property and the plan to repay.

The exit

A consolidation loan is short-term, so it needs a way out. Common exits are:

1. Refinancing to a bank once the daily debits are gone and a few months of clean statements are built up.
2. Business cash flow, now that money isn't leaving the account every day.
3. Selling an asset, such as surplus equipment, stock, an investment property or part of the business.
4. Settlement of a property sale.

We will talk this through openly on the first call. If the numbers don't work, we will tell you rather than add another layer of debt. Our exit strategy guide covers the options.

How it runs

1. List the debts. Who is owed, how much, and the payout figures.
2. Call us. We look at the total, the property equity and the exit. Conditional approval can often be given on the phone and a term sheet issued in about 30 minutes.
3. Payout letters. We obtain or you provide payout figures from each lender and the ATO.
4. Settlement. Funds are paid directly to the lenders, ATO and creditors at settlement, and the debits stop. Eligible loans can settle in as little as 24 hours.

Fix the cause, not just the debt

Consolidation works best when the reason the debts stacked up is also addressed. That might be pricing that has fallen behind costs, a customer who pays too slowly, or a payment plan that was never realistic. We are not accountants, but we are business owners, and we will ask the practical questions. A loan that clears the debts and leaves the business with a little working capital usually gives the best chance of a clean exit.

What we need

• ID for borrowers and guarantors.
• The security property address and existing mortgage details.
• A list of debts to be cleared with payout figures.
• Your plan to repay.

Pricing

Each loan is priced on the client's individual circumstances, aiming for the sharpest rate available for that situation, with the full cost shown before you proceed. We will show you clearly what you are paying now versus what you will pay with one consolidated loan.

Take back control

If debits are emptying your account every morning, call 1300 123 024 or apply online. Brokers can send scenarios through our broker page.

Business-purpose lending only. Approval, timing and terms depend on the scenario.

Frequently asked questions

Brokers: send the scenario through the Equity Tap broker channel and you will deal with the same lending team.