Quick answer
Sole traders can get the same business loans as companies: unsecured loans, equipment finance, lines of credit and property-secured loans. The difference is that the lender assesses you personally, because legally you are the business. Your personal tax return, credit file and other debts all count, and a tax return kept deliberately lean can make your income look smaller than it really is, so lenders may add back non-cash expenses.
Key points
- A sole trader borrows in their own name, so business and personal debts are assessed as one picture
- Your individual tax return and notice of assessment are the income evidence, with add-backs for non-cash costs
- Unlimited liability means your personal assets back the debt even when the loan is unsecured
- Switching to a company gives you a new ABN, which can reset how long lenders think you've traded
- A separate business account isn't legally required, but lenders find it far easier to read
A company director borrows on behalf of something separate from themselves. A sole trader doesn’t have that layer. Your ABN identifies you as a person in business, your income is taxed in your own name, and business.gov.au is blunt about the consequence: you’re legally responsible for all of the business’s debts.
For lenders, that makes a sole trader simpler in some ways and trickier in others. Here’s how they actually look at you, and how to present yourself well.
Is it harder for a sole trader to get a business loan?
Not inherently. Plenty of tradies, couriers, consultants, mobile hairdressers and mechanics borrow as sole traders every week, from banks and non-banks alike. Banks in particular are often happy to lend to an established sole trader with tidy tax returns, and when you fit their criteria they’re usually the cheapest option. Take a bank offer seriously.
Where sole traders run into trouble is less about the structure and more about what tends to come with it:
- Business and personal money mixed in one account, which makes deposits hard to read.
- A tax return designed to pay as little tax as possible, which also makes income look small.
- Personal debts that compete with the business loan, because they all belong to the same person.
- A thin track record, because a lot of sole trader businesses are young or deliberately kept small.
Each of those has a fix, and none of them needs you to change structure.
How does a lender see a sole trader?
| What they assess | How it works for a sole trader |
|---|---|
| Borrower | You, as an individual, with your ABN noted. No company, no separate guarantee |
| Income | Your individual tax return with its business schedule, plus your notice of assessment. Online lenders may use bank statements instead |
| Other debts | Home loan, car loan, cards and personal loans all count against what you can repay |
| Credit file | Your personal file is the only file. There’s no separate company record to lean on |
| Turnover | Bank deposits and, if registered, your BAS |
| Security | Not needed for modest unsecured amounts; bigger loans lean on real estate or the item being bought |
The “one person, one picture” point catches people out. If you took on a larger home loan last year, a lender assessing a business loan sees that repayment too. Our business borrowing power calculator is a good place to sense-check the combined numbers before you apply.
Can a lean tax return make you look smaller than you are?
A capable accountant will claim every deduction you’re legitimately entitled to. That’s sensible for tax, but a lender reading the bottom line sees a thinner income than you really live on.
Lenders that assess from tax returns often accept add-backs: expenses that reduce taxable income but don’t drain cash, or won’t recur. Common ones are:
- write-downs on vans, utes and tools, including big instant asset write-off claims
- interest on a loan that the new finance will pay out
- a genuine one-off cost, such as a major repair or a legal bill
- super contributions you chose to make above the minimum
Ask any lender which add-backs it accepts. Our glossary entry on add-backs explains how they’re usually calculated.
If the tax return still doesn’t reflect reality, or your latest one isn’t lodged, low doc business loans assess from BAS, bank statements or an accountant’s declaration instead. Online lenders sizing loans on your deposits care far less about the taxable figure.
Not sure which way of assessing suits your paperwork? Run it past us. The form is short and doesn’t involve a credit check.
Which loans suit sole traders best?
The structure doesn’t limit the products. The purpose and your security do.
- Equipment and vehicle finance for the ute, van, trailer or tools. The asset secures it and the repayment matches its useful life. This is the most common sole trader loan of all.
- Unsecured business loans for working capital, stock or a short gap, sized on your deposits. See unsecured business loans.
- A business line of credit if your income is lumpy, with interest charged only on the portion you’ve used.
- Property-secured loans for larger amounts, drawing on equity in the family home or a rental.
One question sole traders often ask: why not just take a personal loan? It can be quicker, but a personal loan is usually smaller, is assessed under consumer rules and sits as personal debt on your file. Our business loan vs personal loan comparison runs through when each makes sense.
A worked example: a mobile mechanic’s second van
Consider an illustrative mobile mechanic, a sole trader for four years. Deposits run at about $16k a month. Their last tax return shows $58k of taxable income after a large depreciation claim on their first van and tools, and they have a home loan with their partner.
A bank reading only the taxable income worries the home loan leaves little room. Two adjustments change the picture: adding back the depreciation lifts the assessable income noticeably, and the new $55k van will be financed by a chattel mortgage secured by the van itself. The mechanic provides two tax returns, notices of assessment, six months of statements from a business-only account and the dealer’s quote. The application now reflects the business they actually run.
Should a sole trader become a company first?
Sometimes a company makes sense, especially as the business and its risks grow. A company limits liability (though lenders will still want a director’s guarantee) and can open up different tax options. That’s a conversation for your accountant.
From a lending angle, though, timing matters. A new company gets a new ABN, and some lenders, particularly automated online ones, will treat it as a young business until it builds its own statements. If you plan to restructure and borrow in the same year, borrow first or keep strong records linking the old and new entities. Our page on business loans with an ABN under 6 months explains how to show history across a restructure.
A sole trader’s checklist before applying
- Open, or tidy, a business-only account and run every business payment through it.
- Collect your last two individual returns plus the ATO’s assessment notice for each, and your BAS if you’re registered for GST.
- List every personal debt with balances and repayments. The lender will see them anyway.
- Ask your accountant for an add-back summary if your taxable income is lean.
- Pull your credit file from the main bureaus and correct any mistakes.
- Choose the loan type that matches the purpose, then apply once.
You’re the business: let’s find the loan that fits you
Being a sole trader means the lender is really backing you: your skills, your work and your track record. Presented properly, that’s a strong story.
Spend a minute on our enquiry form. Asking leaves no mark on your credit history. Your phone won’t start ringing with strangers, because the enquiry stays with us. Someone on our team reviews your income, your commitments and the purpose of the loan, and rings you personally. Put down your real turnover and current repayments; the closer those figures are to the truth, the better the first suggestion will be.
Frequently asked questions
Can a sole trader get a business loan?
Yes. Banks, non-banks and online lenders all lend to sole traders. The loan is in your personal name with your ABN attached, and the lender assesses your income, credit file and personal debts alongside the business's bank statements.
Do sole traders need to give a personal guarantee?
Usually not in the same way a company director does, because you're already personally liable as the borrower. There's no separate entity to guarantee. A lender might still ask a spouse or another person to guarantee if your own finances aren't strong enough.
What documents does a sole trader need for a business loan?
Typically your last one or two individual tax returns and notices of assessment, recent BAS if you're registered for GST, three to twelve months of bank statements, ID and a list of your debts. Online lenders may only need bank statements; banks usually want the full set.
My taxable income is low because my accountant minimises tax. Will that hurt me?
It can, because many lenders size repayments from taxable income. Ask whether they add back depreciation, interest on debts being refinanced and genuine one-off costs. Lenders who assess from bank statements or BAS can also see the turnover a low tax figure hides.
Do I need to be registered for GST to get a loan?
Not for every lender. You must register once turnover reaches $75k, and some lenders insist on GST registration as a sign of scale; as at October 2026 Moula listed it as a requirement. Others lend to smaller sole traders who aren't registered.
Should I set up a company before I borrow?
Not just for the loan. A company has its own ABN, so to some lenders it looks new until it builds history. If you're restructuring anyway for liability or tax reasons, talk to your accountant about timing it around any finance you need.