Statutory demand received: your funding options inside the 21 days

Twenty-one days. That’s the number to write on the whiteboard the moment a creditor’s statutory demand arrives at your registered office. It isn’t a negotiation window or a polite reminder; it’s a legal countdown, and what you do inside it decides whether the creditor can move to wind up your company.

The good news is that 21 days is enough time to do something sensible, provided you start on day one. Some owners need to pay. Some need to dispute. A few need advice that has nothing to do with borrowing. This page helps you work out which group you’re in, and if funding is the answer, how to get it before the deadline.

What a statutory demand actually is

Put simply, it’s a Corporations Act document telling a company to settle or otherwise resolve a debt. It applies to companies, not sole traders, and the debt must be at least the statutory minimum of $4,000, the figure that has applied to demands served since 1 July 2021. Creditors can combine several debts to reach that amount. Suppliers, landlords, contractors and the ATO all use them.

Once the demand is served, the company has 21 days to do one of three things:

1. Pay the amount in full.
2. Secure or compound the debt to the creditor’s reasonable satisfaction, which in practice means an agreed payment arrangement, ideally confirmed in writing.
3. Apply to the court to set the demand aside, with a supporting affidavit, lodged with the court and delivered to the creditor before day 21 ends.

If none of these happens, the law presumes the company is insolvent for the purposes of a winding up application made within the following three months. The creditor doesn’t need to prove anything more about your finances; the unanswered demand does it for them.

Pay, dispute or get advice: which are you?

Before you call a single lender, sort the demand into one of these boxes.

Your situation	The right move	Why
Debt owed, company otherwise trading well	Pay or fund it, or agree a plan with the creditor	Finance can solve a one-off timing problem cleanly
Debt partly or wholly disputed	Apply to set aside, with legal help	Borrowing to pay a debt you don’t owe wastes money
You have a genuine claim against the creditor	Seek to have it set aside, relying on your counterclaim	The court nets your claim off against theirs
Several creditors chasing, can’t meet debts as they fall due	Speak to an insolvency adviser before borrowing	New debt doesn’t fix insolvency and may make it worse

That last row matters. If the demand is one symptom among many (overdue tax, unpaid super, other suppliers on stop), a loan just moves the pressure. A company owing $1m or less in total may be eligible for small business restructuring, a process where a registered practitioner helps the directors put a plan to creditors while they keep control of the business. ASIC’s guidance sets out the eligibility rules, including that employee entitlements due must be paid and tax lodgments must be up to date.

Can a lender really fund in time?

For the right file, yes. The practical issue is that most banks take longer than 21 days to approve new lending, especially when there’s a demand on the table. Banks are still worth a call if you have a long relationship and an existing facility that could be increased, because they’re usually the cheapest money available. If the bank can’t move or says no, these are the usual routes:

• Caveat loans. The strongest fit for a statutory demand. Secured on property you or a director own, approved mainly on equity and the exit plan, and often funded inside a few business days.
• Second mortgages. Slightly slower, can run longer and often cost less per month, which suits a larger debt you’ll pay down over a year or two.
• Short unsecured loans. Fintech and non-bank lenders may fund a smaller demand quickly if bank statements show steady trading and no stack of existing short-term loans.
• A loan-backed instalment deal. Sometimes the cleanest answer is a deposit to the creditor from a modest loan, plus a written plan for the rest. That counts as compounding the debt if the creditor accepts it.

When the creditor is the tax office, read ATO tax debt business loans as well, because the ATO has its own payment plan options and pressure points such as director penalty notices.

Clock already running? Tell us about the demand. It’s around a minute and your credit report stays as it is.

What lenders want to see

A lender funding a statutory demand is really asking two questions: will this loan end the problem, and how will it be repaid? Bring:

• the demand itself, plus the date of service;
• a few lines on where the debt came from and what stopped it being paid;
• recent business bank statements and a current list of what the company owes;
• the address of any property you can offer, with the balance owing on it;
• confirmation of your ATO position (lodgments up to date, any plan in place); and
• a realistic exit: refinance, an asset sale, a large receivable or ongoing cash flow.

Check how much equity you can work with on the property equity calculator before you apply.

An illustrative timeline

A Melbourne shopfitting company is served with a demand from its joinery supplier for $38k on day 0. The directors agree the debt is owed; a slow-paying client had held up the money.

• Day 1: the directors call the supplier, confirm the amount and say payment is being arranged. They also ask their accountant whether anything else is overdue. Only BAS, on a plan, is outstanding.
• Day 2: they make one enquiry for a caveat loan secured on a director’s home, with the slow client’s invoice as the exit.
• Day 5: a desktop valuation is done and an offer issued for $45k over three months, covering the debt plus fees.
• Day 8: loan papers are executed and funds go straight to the supplier, who emails confirmation that the demand has been met.
• Month 2: the client pays and the caveat loan is cleared early, with the caveat withdrawn from the title.

The total cost of that loan, in dollars, was a fraction of what a liquidation would have cost the owners and everyone on the payroll.

Mistakes that make a demand worse

• Waiting until day 18. Lenders need valuations and documents; lawyers need time to draft a set-aside application.
• Assuming a phone promise counts. An informal “we’ll sort it” doesn’t stop the clock. Get any arrangement in writing.
• Borrowing to pay a disputed debt. If the amount is wrong, the court is the right forum.
• Hiding other debts from the lender. They’ll find them on the credit check and the trust is gone.
• Paying without written confirmation. Ask the creditor to confirm the demand is satisfied or withdrawn.

Our glossary entry on the statutory demand has the plain-English definition, and the guide on what a statutory demand means covers the legal side in more depth.

Twenty-one days is enough if you start now

Owners who come to us with a statutory demand are often embarrassed about it. There’s no need. A sound business with one creditor at the door is a common story, and it’s one our team works through regularly, usually with property-secured lenders who are comfortable with tight deadlines.

Our form needs around sixty seconds, and asking a question triggers no credit check. Our own team reads what you send; it isn’t put out to tender among lenders. A specialist then calls you to go over the debt, the deadline and the security available. Please give us the actual served date and the full amount owed, because the timeline shapes which lenders can realistically help.

Talk to us about the demand →