Business loans after small business restructuring

Small business restructuring exists so that a viable company can deal with its debts without being wound up. If you’ve used it, you made a hard call to keep the business alive, and creditors agreed the business was worth saving. That’s a better story than most lenders assume when they first see the letters “SBR” on a file.

The challenge is that it is on the file, publicly, and lenders treat it in stages. Understanding those stages tells you which door to knock on, and when.

A quick refresher on how SBR works

SBR sits in Part 5.3B of the Corporations Act. Based on ASIC’s guidance, the main features that matter to a future lender are:

• Eligibility: the company’s total liabilities must not exceed $1m on the day the restructuring practitioner is appointed, staff entitlements already owing have to be paid, and every required tax return and BAS has to be lodged.
• Directors stay in control: day-to-day trading continues, but anything outside the ordinary course needs the practitioner’s consent.
• Tight timeframes: the company generally has 20 business days to put forward a plan, and creditors usually have 15 business days to vote on it.
• Plan length: payments to creditors under a plan can run for up to three years after it’s accepted.
• Once every seven years: a company can’t use SBR if, within the last seven years, it has already gone through a restructure or a simplified liquidation, and similar limits apply to its directors.

Our glossary entry on small business restructuring has the plain-English definition, and the longer guide to small business restructuring walks through the process itself.

What does a lender see when it looks you up?

Quite a lot, and quickly.

During the restructuring, the company’s status on the ASIC register changes from registered to external administration, and every public document must carry the words “restructuring practitioner appointed” after the company name. Once creditors accept a plan, the status goes back to registered and the wording is no longer needed.

A lender running a company search will therefore see the appointment notice in the company’s history, even years later. Credit reporting bodies record it too. It isn’t something you can keep quiet, so the aim is to tell the story before the lender finds it.

The lender will also look at the directors. SBR doesn’t usually release personal guarantees or director penalty liabilities, so any guarantees given to the old creditors still matter, and so does each director’s own credit file.

How lenders read each stage

Stage	What it means	How lenders typically respond
Proposal period	Practitioner appointed, plan being prepared or voted on	Almost all lenders wait. New borrowing needs the practitioner’s consent
Plan in progress	Plan accepted, payments being made	Asset and property-secured lenders may help; unsecured lenders want a track record of payments
Plan completed	All plan payments made, obligations met	Most non-bank lenders will consider it, with an explanation. Banks become possible over time
Plan terminated	A breach wasn’t fixed within 30 business days	Very difficult; the company may move to liquidation

That middle row is where most owners are when they start looking for finance. The longer and cleaner the payment record, the more lenders come back into play.

What else are lenders checking?

Beyond the SBR notice itself, assessors focus on a handful of things that show the restructure actually worked:

• Tax compliance since the plan: the ATO is often the largest creditor in a restructure, so new BAS lodged and paid on time is the single strongest signal.
• Bank statement conduct: no dishonours, no new arrears, and trading income that covers costs and plan payments.
• Why it happened: a lost major customer, a pandemic hangover or a one-off bad debt reads very differently from a business that was never profitable.
• What changed: cost cuts, new pricing, a new bookkeeper, better debtor management. Lenders want evidence the cause has been dealt with.
• Serviceability: whether profit covers existing commitments plus the new loan. Our debt service coverage ratio calculator gives you the same ratio many lenders use.

If you’re unsure where your file sits, tell us about the restructure and we’ll look at it with you.

Which finance options open up first?

Your existing bank, if it stayed with you. If your bank wasn’t a creditor in the plan, or supported it, it may be willing to keep facilities in place and consider modest new lending once the plan is complete. Banks are usually the cheapest money and a long relationship counts. Expect them to want the plan finished and fresh financials.

Equipment and vehicle finance. Because the asset itself is security, equipment finance is often the first product available after an SBR, sometimes while the plan is still running. It’s a good way to start rebuilding a positive repayment record.

Invoice finance. If the business invoices other businesses, lending against those invoices relies heavily on the quality of your customers, so a past restructure weighs less.

Property-secured lending. A director who owns a home or investment property with equity can offer it as security. A second mortgage is assessed mainly on that equity and a clear repayment plan, so lenders can look past the SBR notice more easily. This can also be used to pay out the remaining plan contributions in one go, if the plan allows it.

Unsecured cash flow lending. Usually the last to reopen. Most want six to twelve months of plan payments, clean statements and tax up to date. When they do lend, amounts tend to start small and grow with good conduct.

Worked example: a plastering company 14 months after its plan

This scenario is invented to show how a file might be read.

A commercial plastering company with about $1.4m turnover went into SBR after a builder collapsed owing it $210k. Liabilities were around $640k, most of it to the ATO and suppliers. Creditors accepted a plan that paid a portion of debts over 18 months.

Fourteen months in, every plan payment is on time, all BAS since the plan has been lodged and paid, and statements show no dishonours. The company has just landed a sizeable fit-out job and needs $120k for materials and a second work van.

An unsecured lender offers $40k, citing the plan still in progress. An equipment financier funds the $65k van on its own security. One director owns a home with substantial equity and uses a modest second mortgage to fund the materials, repaid from contract progress claims. The plan is finished four months later, and the company’s next unsecured application is assessed far more favourably.

Steps to take before you apply

1. Get a copy of your plan and payment record from the practitioner, showing every payment made.
2. Pull an ASIC company extract so you see exactly what a lender sees.
3. Lodge and pay everything current with the ATO. Nothing undoes trust faster than a new tax debt.
4. Write a one-page explanation: what caused the restructure, what changed and how the business has traded since.
5. Gather your recent financials, ideally a management profit and loss covering the period since the plan.
6. Match the product to the stage you’re at, rather than applying broadly and collecting declines.

Mistakes that set you back

• Not disclosing the SBR. It will be found. Concealment turns a manageable conversation into a decline.
• Missing a plan payment to fund something else. A plan breach can end the plan and leave the company far worse off.
• Borrowing to plug a hole the restructure didn’t fix. If the business still isn’t profitable, new debt brings back the same pressure.
• Using daily-repayment loans to fund growth while plan payments are still running. Stacked repayments are hard on cash flow and lenders notice them.

A second chance deserves a careful lender

Getting through a restructure takes resilience. The right next loan should build on that, not put it at risk, and the lenders who understand SBR files are rarely the ones advertising the loudest.

Enquiring takes roughly a minute, and it won’t trigger a credit check or show up on your file. We don’t shop your enquiry around to dozens of lenders; it stays with one team. One of us reads through the restructure, your plan record and the purpose of the loan, then picks up the phone. Describe the plan’s status and your current trading precisely, because that’s what lets us point you at a lender that suits on the first attempt.

Ask about finance after your restructure →