Owe the ATO and the payment plan has fallen over? Clear the debt with a short-term secured loan.

The situation: the ATO wants its money and the plan is no longer working

Most ATO debts don't start as a crisis. A slow quarter, a big customer who paid late, a GST bill that landed at the same time as a supplier invoice. You set up a payment plan, kept it going for a while, then missed an instalment. Now the plan has defaulted, the full balance is due, and the letters are getting firmer.

At that point the tax office has more tools than most creditors. It can issue a director penalty notice, send a garnishee notice to your bank or your customers, report the debt to credit reporting bureaus, or move towards a statutory demand. None of those are good for a trading business, and the longer the debt sits, the more general interest charge builds on top of it.

Equity Tap is a direct, independent private business lender. We lend our own money, Australia-wide, from $50k to $5m for one to twelve months, secured by a first mortgage, second mortgage or caveat over residential or commercial property. Paying out an ATO debt is one of the most common reasons business owners call us.

Why the usual options are too slow or simply say no

A bank will want two or three years of tax returns, BAS and financials. If you owe the ATO, those documents tell the bank exactly what it doesn't want to hear, and a refinance can take up to three months or more even if it goes ahead. Cash flow lenders often decline once they see tax debt on the statements or on the credit file. Trade credit doesn't touch the tax office at all.

We look at it differently. ATO debt, a defaulted plan, or a past decline elsewhere is not automatically a problem for us. There is no credit check at initial assessment, and we don't need tax returns, BAS, profit and loss statements, an accountant's letter or bank statements for a property-secured loan. We look at the property, the purpose and how the loan will be repaid.

How a short-term loan clears the ATO

The loan pays the tax office directly or into your account to pay it, so the debt is cleared in one hit. That stops the general interest charge building, takes the pressure off your directors, and lets you deal with the business instead of the collections team.

Because many business owners already have a home loan they are happy with, we often lend on a second mortgage and leave the first mortgage where it is (the first lender's consent may be needed). If the property is clear or nearly clear, a first mortgage loan may suit, and for some scenarios a caveat loan is the quickest path.

Repayments can be interest only, or interest for up to the first six months can be prepaid or added to the loan. That means no scheduled payments in that period, which is often exactly what a business needs while cash flow recovers. Interest is not waived; it is simply handled up front or at the end.

The exit: how the loan gets repaid

Short-term money only works with a clear way out. Before we lend, we agree the exit with you. Common exits on ATO debt loans include:

• Refinance to a bank once your lodgements are up to date and the tax debt no longer shows as outstanding.
• Business cash flow over the coming months, for example after a seasonal peak.
• Sale of a property, equipment or stock that is already underway or planned.
• Collection of receivables from a large contract or a slow-paying customer.

Our exit strategy guide walks through how to set this up properly. We would rather spend ten minutes getting the exit right than lend you money you can't repay.

What we need from you

Equity Tap does not need tax returns, BAS, profit and loss, an accountant's letter or bank statements for a property-secured loan. We do need:

1. Photo ID for each borrower and guarantor.
2. The property address and details of any existing mortgage on it.
3. A copy of the ATO statement or notice showing what is owed.
4. Evidence of the exit, such as a refinance pre-approval, a contract of sale or a receivables schedule.

Full detail is in our business loan documents guide.

From first call to the ATO being paid

Call us on 1300 123 024 and tell us what is owed, what the property is and how you plan to repay. There is no credit committee; the person who answers the phone is often the person who makes the decision. Conditional approval can often be given on that call and a term sheet issued in about 30 minutes once we have the scenario. We don't order a valuation before approval, so you aren't paying a valuer or waiting for one, and you aren't leaving the business to meet one at the property. Eligible loans can settle in as little as 24 hours.

If the ATO has already escalated, read our pages on a director penalty notice, a statutory demand or GST and BAS arrears. Our longer guide to ATO tax debt business loans covers the options in more depth.

Brokers with a client who owes the ATO

If your client has been declined because of tax debt, send the scenario through our broker page. You deal with the same lending team and get a fast indicative answer, so you keep the client and the refinance down the track.

Talk to us today

Each loan is priced on the client's individual circumstances, aiming for the sharpest rate available for that situation, and the full cost is shown before you proceed. We make sure you fully understand the loan, the costs and the exit before anything is signed. Apply online or call 1300 123 024.

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.