Quick answer
A private mortgage can still be possible when your business's credit is damaged, whether that's an ATO tax debt listed with a credit bureau, a supplier default or a judgment against the company. A private lender weighs the property's equity and a clear exit more heavily than the file. Often the loan itself is used to pay out the debts behind the bad marks.
Key points
- Business credit marks are judged alongside the equity and the exit, not instead of them
- The ATO can list business tax debts of $100k or more that are over 90 days overdue
- Paying out the debt behind a listing is often the loan's purpose
- Tell us about every mark upfront; surprises slow a loan down more than history does
- No credit check when you enquire
- Credit
- Bad credit, defaults and ATO debt considered — never disqualifying on its own
- Borrowers
- Companies, trusts and sole traders, including start-ups — no minimum trading period or turnover
- Loan size
- $20k – $5m
- Enquiry
- 60-second loan check — no credit check to find out
Most writing about bad credit assumes the problem is personal: a missed card payment, an old phone bill, a discharged bankruptcy. For a lot of business owners, it isn’t. Their own file is fine. It’s the company that’s carrying an ATO listing, a supplier default or a judgment from a dispute that went the wrong way. Banks often treat those marks as a stop sign. A private mortgage can treat them as the reason for the loan.
This page covers credit trouble on the business side. If your concern is your own personal history, our pages on a first mortgage with bad credit and a second mortgage with bad credit cover that ground.
What counts as bad credit for a business?
A business’s credit position is built from several sources, not one score:
- Commercial credit information. The OAIC explains that commercial credit is credit that “isn’t for personal, household or family purposes”, such as business loans and trade accounts. Defaults lodged by suppliers and finance companies sit here.
- ATO business tax debt listings. The ATO can report certain overdue business tax debts to credit reporting bureaus.
- Court records. Judgments against the company, statutory demands and winding-up applications.
- Directors’ personal files. Where directors guarantee the loan, their own history comes into the picture too.
The distinction matters because the rules differ. The OAIC notes that credit reporting laws generally govern consumer credit information, while commercial credit information is handled under the Australian Privacy Principles where they apply.
When can the ATO list your business tax debt?
This is the mark we see most often. According to the ATO, a business tax debt can be disclosed to credit reporting bureaus when all of these apply:
| Criterion | What the ATO says |
|---|---|
| Business status | You have an ABN and aren’t an excluded entity, such as a registered charity or complying super fund |
| Size and age | At least $100,000 of tax debt is overdue by more than 90 days |
| Engagement | You aren’t engaging with the ATO, for example through a payment plan you’re keeping to |
| Complaints | You have no active Tax Ombudsman complaint about the intention to report |
| Warning | The ATO gives written notice, and you have 28 days from receiving it to act |
The ATO also says that cash flow problems and financial hardship aren’t generally treated as exceptional circumstances that stop a report. The useful part is at the other end: the information is removed once you no longer meet the criteria, for example by paying the debt in full.
If you have received a notice of intent to disclose, that 28-day window is the time to move. A private mortgage to pay an ATO debt is built for exactly that. Our guide to ATO debt on your credit file explains the listing process in more depth.
How does a private lender weigh business credit marks?
We look at them, and we ask about them, but they sit behind three bigger questions:
- Is there enough equity? Up to 80% of value on residential security and up to 70% on commercial, less what is already owing.
- Where does the money go? If it pays out the debt behind the mark, the loan is solving the problem rather than adding to it.
- What repays the loan? A sale, a refinance once the file is clean, a contract payment or a refund.
Bad credit, defaults and ATO debt are considered, and never disqualifying on their own. What does slow a loan down is a mark we find that you didn’t mention. If you know about a judgment or a default, tell us at the start. It turns a red flag into a line item.
Once the property, the debt and the exit add up, you can check where you stand in about a minute.
Which business credit problems can a private mortgage fix?
Here’s how common marks line up with what a secured loan can do about them:
| The mark | What usually sits behind it | How a private mortgage can help |
|---|---|---|
| ATO tax debt listing | Overdue GST, PAYG withholding or income tax | Pays the ATO in full at settlement, so the listing criteria stop applying |
| Supplier default | An unpaid trade account | Pays the creditor directly and gets the account settled |
| Court judgment | A lost dispute or an unpaid debt pursued in court | Funds payment of the judgment debt |
| Statutory demand | A creditor’s formal demand on the company | Funds payment or a negotiated settlement within the deadline; see responding to a statutory demand |
| Several small defaults | Cash flow strain across many accounts | Consolidates them into one secured loan with no repayments for the first 6 months |
Paying a debt doesn’t necessarily erase history; the OAIC lists, for example, defaults and court judgments as staying on a consumer report for five years. But a paid mark reads very differently to the next lender than an open one, and an ATO listing that’s no longer current is removed.
Illustrative example: clearing the company’s file to win back the bank
A Wollongong civil contractor has a clean personal file, but the company has an ATO listing for about $180k of overdue activity statement debt and two supplier defaults totalling $40k. Its bank won’t renew an equipment facility while the listing stands.
The director owns a debt-free investment house. Illustrative only: a private first mortgage of $240k pays the ATO and both suppliers at settlement. Interest is capitalised for the first 6 months, so the business has no loan repayments while it catches up its lodgements. With the ATO debt paid, the listing criteria no longer apply. Nine months later the company refinances with a bank, and the private mortgage is discharged.
The loan didn’t hide the credit problem. It removed the cause.
What should you have ready if your business file is damaged?
Bring the credit story with you. It saves a day of back-and-forth:
- the latest ATO statement of account, and any notice of intent to disclose;
- copies of any default notices, judgments or demands, with the amounts and creditors;
- a short note on what happened and what has changed since;
- the property’s latest loan statement and rates notice;
- company or trust documents, and ID for each director;
- evidence of the exit, such as a sale listing or a refinance discussion.
Our documents for a private mortgage guide explains each item in more detail.
When is a private mortgage the wrong fix for bad credit?
A secured loan helps when the bad credit is the leftover of a problem that is now under control. It’s the wrong fix when:
- the business is still losing money each month, so the debts will come back;
- there’s no property with real equity, or the owner of the property isn’t willing to offer it;
- the company may be insolvent, or a winding-up application is already well advanced, in which case advice from an accountant or insolvency professional should come first;
- the purpose isn’t business. These loans are for business purposes only.
Company carrying a black mark? See if you qualify
A damaged business credit file is something we see every week, and it doesn’t put us off. Tell us what the property is worth, what is owing and which debts are dragging the file down, and we’ll tell you plainly whether a private mortgage can clear them.
The check takes around 60 seconds and runs no credit check, so finding out won’t leave another mark. It goes to one direct lender, not a pile of lenders. A specialist reads it and calls you. Be accurate about the debts and the property; the more complete the picture, the more useful the answer.
Frequently asked questions
Does my company have its own credit file, separate from mine?
Yes. Businesses build up commercial credit information, including defaults from suppliers, court actions and, in some cases, ATO tax debt listings. Directors also have their own personal files. A lender may look at both when you decide to proceed.
Will the ATO listing disappear once I pay?
The ATO says the information is removed from the credit report once you no longer meet the reporting criteria, for example by paying the debt in full or engaging with the ATO to manage it. Keep the payment confirmation in case a bureau record needs chasing.
Can a private mortgage pay my trade creditors directly?
Yes. Paying suppliers, the ATO or a judgment creditor at settlement is common. It proves the purpose, clears the debt on the day and gives you the paperwork to update any listings.
Is a winding-up application the end of the road?
Not necessarily, but it is urgent. A company facing a winding-up application needs legal advice straight away. Where there's property with equity and a realistic plan, a secured loan can sometimes fund a settlement with the creditor.
I had a previous company go into liquidation. Does that stop me?
On its own, no. We'll want to understand what happened and how your current business is different. The property, the purpose and the exit still carry most of the weight.
Do I need perfect lodgements to borrow?
No, but a plan to bring them up to date helps, particularly if your exit is a bank refinance. Outstanding returns are a common reason banks decline, and fixing them during the private loan's term is part of a good exit.