Why a statutory demand is different from an ordinary overdue bill
A statutory demand is a formal demand under the Corporations Act served on a company for a debt of at least the statutory minimum. The company has 21 days from service to pay the debt, reach an agreement with the creditor, or apply to court to have the demand set aside. If none of those happen, the company is presumed to be insolvent, and the creditor can apply to wind it up.
That presumption is what makes a statutory demand so serious. It isn't just a debt collector chasing an invoice. It is the first formal step towards liquidation, and once a winding-up application is filed, banks, suppliers and customers start to notice. If the debt is owed and the business is otherwise sound, the simplest answer is often to pay it in full, on time.
Demands come from all kinds of creditors: suppliers, landlords, finance companies, former contractors and the ATO. Whoever sent it, the 21 days are the same.
Why the bank won't move fast enough
A bank refinance commonly takes up to three months or more, needs years of financials, and comes with a credit check that will likely show the very arrears that led to the demand. Cash flow lenders tend to decline a business with a demand on foot. Even if someone says yes, an approval that lands on day 30 is worthless when the deadline was day 21.
Equity Tap is a direct, independent private business lender. We lend our own money, $50k to $5m, for one to twelve months, against residential or commercial property anywhere in Australia, on a first mortgage, second mortgage or caveat. We don't order a valuation before approval. We don't need tax returns, BAS, profit and loss, an accountant's letter or bank statements for a property-secured loan. There is no credit committee, so the decision doesn't sit in a queue.
What a statutory demand loan looks like
For example, a wholesale business with a strong order book falls behind with a major supplier after a customer goes quiet on a large invoice. The supplier serves a statutory demand. The directors own their home and a small warehouse unit. A second mortgage over the home, sitting behind the existing home loan, pays the supplier in full within the 21 days. The loan is repaid when the customer pays, or from a bank refinance once the business has caught its breath.
That shape repeats across industries. The security is property, the purpose is clearing the demand, and the exit is a specific event the business can point to.
| Option within 21 days | What it involves | Where a loan fits |
|---|---|---|
| Pay the debt | Funds to the creditor before the deadline | A short-term secured loan provides the funds |
| Agree terms with the creditor | Creditor accepts a payment arrangement | A loan can fund a lump sum that makes a deal easier |
| Apply to set it aside | Court application, usually where the debt is disputed | A matter for your lawyer, not a lender |
Repayments that don't add pressure
A business served with a demand usually has tight cash flow. 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. Interest is not waived; it is simply not coming out of the operating account while you stabilise. If you'd rather pay as you go, interest-only repayments are available.
Your exit
We agree the exit before funding. Common exits on demand loans are collecting the receivable that caused the problem, a bank refinance once the business is back in order, the sale of equipment, stock or a property, or trading cash flow over several months. We would rather talk through a realistic exit with you now than create a second problem in six months. Our exit strategy guide is a good starting point.
What to have ready when you call
- A copy of the statutory demand, including the date it was served.
- ID for each borrower and guarantor.
- Property address and existing mortgage details.
- Evidence of how the loan will be repaid.
No credit check at initial assessment. Defaults, ATO debt, a court judgment or a past decline are not automatically a problem.
How fast it moves
Call 1300 123 024. Conditional approval can often be given on the phone, and a term sheet issued in about 30 minutes once we have the scenario. Eligible loans can settle in as little as 24 hours. The earlier in the 21 days you call, the more room there is for things like the first mortgagee's consent on a second mortgage. If the demand is from the ATO, also read our ATO tax debt loan and director penalty notice pages, as both often arrive together.
For brokers
A client with a statutory demand can't wait for a bank. Send the scenario through our broker page, speak with the lending team directly, and get a fast indicative answer so you can keep the client.
Get the demand paid
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 make sure you fully understand the loan and the exit before anything is signed. Apply now or call 1300 123 024.
Business-purpose lending only. Approval, timing and terms depend on the scenario.
Frequently asked questions
How long do I have to pay a statutory demand?
What happens if I do nothing?
Can I get a loan with a statutory demand already served?
Do you need financial statements?
How quickly can you fund?
Can I use my home as security?
What if I dispute the debt?
Brokers: send the scenario through the Equity Tap broker channel and you will deal with the same lending team.