Emergency funding with bad credit or an ATO debt

Crises don’t check your credit file before they arrive. A flood can hit a business that’s still recovering from a tough year, and a cyber attack can land on one that’s already behind with the ATO. When that happens, owners often assume they won’t get help. That’s not necessarily true.

Past credit problems and ATO debt are considered case by case. Here’s what makes the difference.

How do lenders look at bad credit in an emergency?

A lender is really asking three questions:

Question	What helps
What happened?	A short, honest explanation — a past business failure, a divorce, illness, a bad customer, COVID-era arrears
Is it behind you?	Defaults paid or settled, arrangements being kept, time since the event
How will this loan be repaid?	Property security, insurance acceptance, grant approval, steady trading

A crisis that’s clearly caused by an external event — a declared flood, a supplier’s administration, a cyber attack — is usually easier to explain than a slow decline. Evidence helps: claim numbers, notices, incident reports.

What about ATO debt?

After a disaster, many businesses fall behind on BAS or PAYG. The key is to keep the ATO informed:

1. Call before the due date. The ATO says phoning early reduces the risk of penalties. For disaster-affected businesses, the Emergency Support Infoline is 1800 806 218; general lodge-and-pay help is 13 11 42.
2. Lodge even if you can’t pay. Keeping lodgements up to date matters.
3. Ask about a payment plan. The general interest charge continues to accrue, but a plan being kept looks very different to a lender than an unmanaged debt.
4. Ask about remission of penalties or interest where circumstances were beyond your control.

Our ATO disaster support page covers this in more detail. Sometimes funding is used to clear an ATO debt so the business can move forward — that’s considered case by case too.

Why does property security matter so much?

When credit history is patchy, property equity gives a lender comfort that doesn’t depend on your past. Property-secured loans — first mortgages, second mortgages and caveat loans over residential or commercial property — range from $20,000 to $5,000,000 and are often the most accessible option for businesses with credit issues. See property-secured emergency funding.

Unsecured funding (typically $5,000 to $500,000) is still possible with some credit history, but it relies more heavily on clean, consistent bank statements.

If you’d like to find out where you stand, a quick enquiry is a safe first step, because enquiring doesn’t involve a credit check.

What should you tell us upfront?

Honesty early saves time and avoids declines later:

• any defaults, judgments or past insolvency
• ATO debts and whether there’s a payment plan
• other loans, especially short-term ones with frequent repayments
• previous applications and declines
• any property and what’s owed on it

We’d rather know everything at the start and find a solution than discover something halfway through.

What won’t help?

• Applying in lots of places at once. A cluster of credit enquiries close together tends to count against you. One well-matched application is better.
• Stacking short-term loans. Several facilities with daily or weekly repayments can strangle cash flow.
• Ignoring the ATO. An unmanaged tax debt makes every lender nervous.
• Borrowing without an exit. Especially with property at stake, know how the loan will be repaid.

Illustrative example only: an electrician’s business had a default from a failed venture several years ago and a modest ATO balance under a payment arrangement. A storm destroys his van and tools. His insurance will pay for the van but not the tools. A small second mortgage over his home — with the default explained and the ATO plan up to date — replaces the tools so he can take storm-repair work immediately.

Where can you get free help first?

If debts are piling up, the Small Business Debt Helpline (1800 413 828) offers free, confidential financial counselling. Talking to them before you borrow is never a bad idea. See our list of free support services.

How do you explain your credit history well?

A short written explanation often does more than any document. Keep it to half a page:

1. What happened — a couple of plain, factual sentences. For example: a major customer went into liquidation owing money, and a supplier account went into default as a result.
2. What you did about it — paid, settled, set up an arrangement, changed how you manage customers.
3. Where things stand now — current arrangements, how they’re tracking, and your trading since.
4. What’s happened now — the crisis, with evidence such as a claim number or incident report.
5. How this funding helps and is repaid — the purpose, and the exit.

Lenders see many applications with a history. What worries them is not the history itself but surprises, vagueness, or a pattern that hasn’t stopped. A clear account that shows the problem was dealt with — and that the current crisis is a separate, external event — puts you in a much stronger position.

If you’ve had several declines recently, pause before applying anywhere else. It’s better to understand why and find a well-matched option than to add more enquiries to your file.

Want an honest view of your options?

A crisis on top of credit problems is stressful, but it isn’t automatically a dead end. You’ll get a straight answer from us.

An enquiry doesn’t touch your credit file; that only comes up if you choose to go ahead. You won’t get a wave of calls from lenders you’ve never heard of, because we don’t pass enquiries around. A specialist looks at your situation properly before picking up the phone.

Accurate details on the form (amount, purpose, state, any property) are what let us match you properly on that first call. Tell us what happened.