Business debt consolidation secured by property

Most business debt problems are not one big debt. They are five medium ones, each with its own due date, its own collector and its own penalty. A BAS balance with the ATO. An overdraft sitting at its limit. Two online loans taking money from the account every business day. A credit card or two that paid for last winter’s slow patch. Each one alone is manageable. Together they leave no room to trade.

Consolidating them into one loan secured on property can turn that noise into a single number with a single end date. Done well, it buys time to repair the business’s record and refinance to a bank. Done badly, it moves unsecured problems onto your property. This page covers both sides.

What business debts can be consolidated?

Any debt incurred for the business can be considered. The common mix:

• ATO debts: activity statements, PAYG withholding, income tax, superannuation guarantee charge.
• Bank overdrafts and business cards sitting at or over their limit.
• Online and fintech loans, especially those with daily or weekly debits. See refinancing online business loans.
• Equipment balloons and short-dated asset finance. See balloon payments.
• Supplier arrears on extended or overdue terms.
• Private loans or caveats about to expire. See paying out an expiring private loan.

Personal consumer debts, such as a family car loan or holiday credit card, sit outside this lending. Everything here is for business purposes.

Why the ATO part of the stack usually matters most

Tax debt has become more expensive and more visible.

• It compounds. The ATO says tax debts on a payment plan continue to accrue general interest charge, which compounds daily.
• It’s no longer deductible. The ATO confirms that taxpayers can no longer claim a deduction for general interest charge or shortfall interest charge incurred on or after 1 July 2025. The after-tax cost of carrying ATO debt went up. Our guide on ATO interest no longer being deductible explains the change.
• It can reach your credit file. The ATO can disclose a business tax debt to credit reporting bureaus where the business has an ABN, at least $100,000 is overdue by more than 90 days, and the business is not engaging with the ATO. The ATO gives 28 days’ notice before reporting. See ATO debt on your credit file.
• Payment plans can fall over. The ATO warns a plan may default if you don’t lodge on time or pay new debts, making the full overdue balance immediately payable. If that has already happened, read ATO payment plan defaulted.

A bank considering a refinance will see all of this. Clearing the ATO debt first often makes the eventual bank refinance possible.

How a secured consolidation loan works

1. List every debt. Lender, balance, payout figure, what it is secured on, and the daily, weekly or monthly payment.
2. Decide what goes in. Usually the debts that hurt cash flow or carry enforcement risk. A cheap, well-behaved bank loan may stay where it is.
3. Enquire with the property details, what is owing on it, the total payout and the exit.
4. Choose the structure. A private first mortgage if the property is debt-free or the bank loan is being refinanced too; a second mortgage behind a bank loan you keep; a caveat for a smaller, faster tidy-up.
5. Settle and pay out directly. Each creditor is paid from settlement against a payout letter.
6. Collect releases. Confirm PPSR registrations, guarantees and direct-debit authorities are cancelled.
7. Work the exit. Keep tax lodgements and payments current, rebuild the record, then refinance to a bank or sell.

If you already have the list of debts, request a consolidation assessment and a specialist will tell you whether the property supports it.

Which debts should stay out of the consolidation?

Consolidating everything is tidy, but not always smart. Sort each debt into one of three piles before you size the loan.

Pay out now:

• Debts with daily or weekly debits that strip cash flow.
• Overdue ATO balances, especially if they are near the $100,000 reporting threshold or a payment plan has failed.
• Anything with an enforcement step under way: a demand, a default notice, a garnishee.

Consider:

• Overdrafts and cards at their limits. Paying them out only helps if you also reduce or close the limits.
• Supplier arrears, where a payment plan with the supplier might cost nothing.

Leave alone:

• A long-term bank loan on fair terms that is being paid on time.
• Asset finance with a sensible end date and no balloon.
• Interest-free vendor terms or family loans with flexible repayment.

The smaller the consolidation loan, the easier it is to approve, the cheaper it is to carry, and the faster the exit. Borrow for the problem debts, not every line on the balance sheet.

Consolidation options compared

Option	What it fixes	Security	Good when	Limits
ATO payment plan	Spreads the tax debt only	None	Tax is the only problem and you can keep up	Interest keeps compounding; plan can default
Bank refinance	Long-term, lowest-cost restructure	Property and business	Clean record and strong financials	Often declined with ATO debt or arrears
Unsecured consolidation loan	Replaces small debts	Director guarantee	Small balances, decent credit	Amounts limited; often daily or weekly repayments
Selling an asset	Clears debt without borrowing	n/a	A non-core property or asset is available	Time to sell; possible tax on the sale
Property-secured private consolidation	Clears the stack fast, removes debits	First, second or caveat over real estate	Equity is strong and a bank refinance or sale is realistic within months	Short term; costs more than a bank loan

For the bigger picture on asset-backed money, see secured vs unsecured business loans.

Who it suits

• Profitable businesses with messy debt, often after a tough season or rapid growth.
• Owners with ATO debt who need to clear it before a bank will refinance.
• Businesses losing a large share of daily takings to online lender debits.
• Owners whose bank has declined a refinance because of arrears or tax debt.
• Businesses facing a deadline: a defaulted payment plan, a statutory demand or a director penalty notice.

When this isn’t the right move

Consolidation is a structure fix. It isn’t a profit fix, and pretending otherwise is how property gets lost.

• The business loses money every month. If revenue can’t cover costs, rolling debts onto property delays a decision you need to make now. Talk to your accountant, and consider whether a formal restructure is the better path.
• There’s no exit. If a bank won’t refinance even once the debts are cleared, and there is nothing to sell, a short-term loan has no end.
• The existing debts are cheap and calm. Don’t pay out a low-cost bank loan just for neatness.
• The ATO plan is working. If the only debt is tax and the plan is on track, keep it, unless the credit-reporting threshold or a refinance makes clearing it worthwhile.
• It’s personal debt. Consumer debts are outside this lending.

What it costs (without the guesswork)

There is no one price for consolidation, so none is published. Each loan is priced on the property, how much of it is being borrowed against, the term and how credible the exit is, aiming for the sharpest outcome for that combination. Cost components:

• Interest, which can be prepaid or capitalised; read prepaid or capitalised interest for how each works.
• An assessment fee, which varies and is shown on the Letter of Offer.
• Legal and registration costs for the security and its discharge.
• Payout costs charged by the creditors you are clearing, such as break fees.

There is no formal valuation required. A second mortgage or caveat costs more than a first mortgage, because it ranks behind the existing lender.

The fair comparison is dollars against dollars: what the current stack costs over the next six to twelve months, including ATO interest, daily-debit lender charges and any default fees, against the total cost of the consolidation loan for the same period.

Documents you’ll need

• Identification for borrowers, directors and guarantors.
• Statements and payout letters for each debt, including the ATO portal balance.
• Property details and current statements for loans secured on it.
• A short exit plan, ideally backed by your accountant: bank refinance timing, asset sale, or cash-flow forecast.
• Company and trust details where relevant.

How fast

Funding is possible within 24 to 48 hours for up to $5m once documents are in, and $20k to $250k secured on property is possible same day. The usual delay is collecting payout letters from several creditors, so request them all on the same day.

Illustrative example: a Melbourne trade business clears five debts

Illustrative example: A Dandenong engineering business owes the ATO $140,000, two online lenders a combined $95,000, an overdraft of $50,000 and $30,000 on business cards. The owners hold a warehouse worth about $1,600,000 with $250,000 owing to a bank. At an illustrative 65% band on total debt, the warehouse supports about $1,040,000 in total borrowing. A private first mortgage refinances the bank and clears everything else.

Waterfall	Amount
Bank loan payout	$250,000
ATO, online loans, overdraft, cards	$315,000
Total payouts	$565,000
Interest allowance, prepaid for 12 months	set per deal
Assessment fee, legal and payout costs	set per deal
Headroom check	comfortably inside the $1,040,000 illustrative limit
Exit	Bank refinance after 9–12 months of clean lodgements and no arrears

Daily debits stop the week after settlement. The business keeps its tax lodgements current, and its accountant prepares a refinance pack at month nine. A bank refinances the warehouse loan at month eleven. For Victorian security notes, see our Melbourne private lending page.

How to make the exit work

The consolidation loan is the easy part. The exit needs discipline:

• Stay current with the ATO from day one. New debt after consolidation undoes the whole plan.
• Close the accounts you paid out. Don’t let a cleared card or online facility fill up again.
• Keep the paperwork clean. Lodge on time, reconcile monthly, and keep management accounts the bank will want.
• Start the refinance early. Three months before the term ends, ask your bank or broker what they need.

Our guide on the exit strategy for a short-term mortgage goes deeper. If tax is the biggest part of your stack, paying an ATO debt with property equity is the companion page.

See if you qualify to consolidate

If the debits are hitting the account every morning, you need a lender who reads your file today. No credit check applies when you enquire, and the enquiry goes to one direct lender, fundU, not a panel of strangers. A specialist looks at it personally. Give accurate figures for the property, what’s secured on it and each debt you want cleared, and the first answer will be one you can plan around.

Get a consolidation answer on your property, or read about secured business loans first.