Finance for consolidating business debt

Most owners who come to us about consolidating haven’t done anything reckless. They took a sensible loan for a fit-out, then a short online loan when a customer paid late, then a card advance in a slow month, and the ATO quietly built up in the background. Every one of those choices was reasonable on the day. Added up, though, they drain the account nearly daily into five separate hands, and planning feels impossible.

Consolidation can fix that, but only if it’s built from an honest picture of what you owe. That’s where this page starts.

Step one: write the debt list

Start with a single sheet listing everything owed, before any lender conversation. Capture these details for each debt:

Column	Why it matters
Lender and product	Different products have very different payout rules
Written payout figure, dated	The real number a new lender has to clear, not the balance on your app
Repayment amount and frequency	Daily and weekly debits are what squeeze cash flow
Weekly equivalent	Lets you add everything up on the same basis
Remaining term	A debt with six weeks to run may not be worth refinancing
Security	Property, a specific asset, a general security agreement, or nothing
Personal guarantee	Whose name is on the line
Early payout costs	Break costs, fixed fees or exit fees

The weekly-equivalent column is often the eye-opener. A daily debit of a few hundred dollars looks small on its own. Converted to a weekly figure and added to everything else, it can explain why the account never seems to recover.

Ask each lender for a payout letter in writing. Short-term and fixed-fee products frequently charge most of their cost upfront, so the payout may be close to the original total even halfway through. Our page on business debt consolidation loans goes further into those payout traps.

Step two: decide what goes in and what stays out

The urge is to roll everything into one. It’s rarely the best answer.

Usually worth consolidating:

• Daily or weekly online loans, particularly where you’ve stacked several
• Merchant cash advances that take a share of card takings (our page on paying out a merchant cash advance covers those in detail)
• Business credit cards and personal cards carrying business spending
• ATO debt, especially where a payment plan has been missed
• Overdue supplier accounts that are threatening legal action

Often better left alone:

• Equipment finance or a chattel mortgage that’s keenly priced and tied to the asset
• Any debt that finishes within a couple of months
• A cheap bank loan you’re comfortably paying, unless the new lender requires it cleared
• Fixed-rate loans where break costs would wipe out the saving

The aim is to clear the expensive, frequent and stressful debts, and leave in place anything that’s already good value.

Why ATO debt deserves a fresh look

Tax debt used to carry a small consolation: the general interest charge the ATO adds was tax deductible. That changed. Legislation passed in March 2025 removed that deduction: from 1 July 2025, any GIC or shortfall interest the ATO adds is non-deductible, even when the underlying debt belongs to an older year.

In practice, carrying tax debt on a payment plan now costs more after tax than many owners realise, and it compounds daily. If you’re comparing a payment plan with a consolidation loan, compare after-tax costs, because the loan’s interest is generally still deductible for a business purpose while the ATO’s is not. Ask your accountant to run both. Our tax debt loans page looks at clearing ATO debt with finance.

Want a specialist to look over your debt list? Send it through our short enquiry, and we’ll talk through which debts are worth clearing. There’s no credit check for asking.

Step three: choose the kind of consolidation finance

Option	Typical size	Security	Term	Suits
Bank refinance	Larger amounts	Property and business assets	Long	Profitable businesses with clean financials and no recent arrears
Unsecured consolidation loan	Smaller amounts, sized on turnover	None, usually a director guarantee	One to a few years	Trading businesses clearing online loans and cards
Property-secured loan (first or second mortgage)	Up to $5m	Residential or commercial property	Longer	Larger consolidations, including ATO debt
Short-term caveat loan then refinance	Moderate	Property, via caveat	Months	Urgent consolidation ahead of a planned longer refinance
Business line of credit	Moderate	Varies	Ongoing	A smaller clean-up plus a buffer for lumpy months

Banks will often give you the cheapest result if you fit their criteria, so it’s worth asking. If recent missed payments, tax debt or several online loans on your statements put the bank off, non-bank and private lenders consolidate business debt regularly. The refinancing vs debt consolidation comparison helps if you’re unsure which you’re actually doing.

Step four: size the new loan

Add the payout figures for the debts you’re including, the new lender’s fees and legal costs, and any break costs. Then decide whether to add a small working capital buffer, so the first slow month doesn’t send you straight back to a short-term lender.

Next, test the new weekly repayment against the business’s real cash flow, not its best month. Finally, put the total dollar cost of the new loan beside the remaining cost of the old debts in the loan cost comparison calculator. If the new loan costs more overall but frees up enough weekly cash to stabilise the business, that can still be the right call. Just make it knowingly.

Worked example: a printing business with five debts

This is an illustration only. Marco runs a commercial printing business in Melbourne’s south-east. His debt list looks like this:

Debt	Payout	Weekly equivalent
Online loan A (daily debits)	$48k	$1,900
Online loan B (weekly)	$31k	$1,150
Merchant cash advance	$22k	about $900
Two credit cards	$19k	$600
ATO debt, payment plan missed	$64k	$1,400 under the old plan
Press finance (chattel mortgage, 30 months left)	$85k	$780
Total weekly outflow		about $6,730

Marco leaves the press finance alone, since it’s competitively priced and secured on the machine. He consolidates the other five, totalling $184k, plus $9k in fees and a $12k buffer, into a $205k second mortgage over his home with a longer term. His weekly debt outflow, including the press, drops to roughly half of what it was, and the ATO stops adding interest he can no longer deduct.

The total dollar cost over the full term is higher than if he’d somehow finished the short loans on schedule, but he couldn’t, and the missed ATO plan was heading towards firmer action. The steadier cash flow gives him room to quote for larger jobs again.

Step five: clean up after settlement

Consolidation isn’t finished when the new loan funds. Do these within a few weeks:

• Search the PPSR against your company’s ACN or your ABN. Each paid-out lender should remove its registration. A lingering general security interest can trip up your next application. Our PPSR glossary entry explains what you’ll see.
• Collect release letters for every guarantee you gave the old lenders, and keep them.
• Cancel the direct debits with your bank, not just with the lender.
• Close or reduce card limits you no longer need, so the balances don’t creep back.
• Keep lodging on time with the ATO, so a fresh debt doesn’t start building.

Bring the debt list to us

If you’ve read this far, you probably already know roughly what your list looks like, and that a handful of daily debits is doing more damage than any one debt on its own. Turning that list into a single, manageable repayment is something we handle regularly, including for businesses with ATO debt or recent missed payments.

Filling in the enquiry takes about sixty seconds, and your credit score isn’t affected by it. We don’t distribute your details across the market, so no flood of calls; a specialist reads what you’ve sent and phones you personally. Include the debts honestly, ATO balance and all, so the option we bring back is one that clears what actually needs clearing.

Start my consolidation enquiry →