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The Types Of Business Loans You Can Use To Finance Tax Debt

Paying tax debts on time is a challenge all business owners have encountered at least once. These tax debts can arise from income tax, pay-as-you-go (PAYG) instalments, superannuation guarantee charge (SGC), Goods and Services Tax (GST), fringe benefits tax (FBT), and more. But no matter what type of tax debt, the best way to remove the worry is to immediately settle the unpaid tax in full to avoid penalties and interest charges from the Australian Taxation Office (ATO).

However, if you are short on funds, you can also finance some of these tax debts with a loan from a lender. So, depending on your situation, needs and preferences, you can consider the following options as a financial lifeline.

Short-term Business Loans

Short-term business loans are suitable for unexpected tax bills and cash flow issues, perfect for quickly paying off your tax debts. With 6 to 18-month terms, this loan type may have higher interest rates and fees compared to other loans.

Unsecured Business Loans

Ideal for small businesses that lack assets, unsecured business loans do not require property or equipment collateral. The trade-off, however, is a lower loan amount, higher interest rates and stricter eligibility criteria. 

Secured Business Loans

Secured by property or assets like equipment, these loans allow you to access more significant loan amounts, longer repayment terms, lower interest rates and more flexible eligibility criteria.

Before applying for a tax debt loan, run through our checklist to ensure you settle your obligations as soon as possible.

✓ Compare different lenders and their reputation
✓ Compare loan products and their specific offers
✓ Check the terms and conditions of the loan product
✓ Compare interest rates, fees and repayment schedule
✓ Take note of penalties for late or missed payments
✓ Contact and inform ATO of your intent to pay debt with a loan
✓ Ask ATO for available payment plans or financial assistance you can access

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