Due to a small and manageable ATO debt, our client had come to us after being frustrated by the banks who would not provide the business with a line of credit.
With an enviable pipeline of work and increasing opportunity, they had been seeking an overdraft to provide them the working capital support to further grow their 23 year old business.
We could see the fundamentals of the business were strong and their turnover and margins meant their ATO debt could be managed comfortably or retired with a tax debt loan.
With this in mind we recommended a non bank unsecured overdraft provider who discounts their rates progressively to businesses who turnover more than $1.5M, with larger discounts available to businesses turning over in excess of $5M and $10M respectively.
Our submission to the lender spoke to the strengths of the business and the lender agreed with our position approving and funding the overdraft within 24 hours.
Our client was rapped and especially so when we pointed out there was also a solution to payout their ATO debt with a loan over a 5 year term at a rate that was lower than the tax office’s interest cost.
Manageable tax debt doesn’t automatically exclude you from good value lines of credit.
Why This Was the Right Loan
For a business servicing government facilities, consistency and reliability in cash flow are paramount — especially when competing for long-term contracts and responding to new tenders.
Despite the client’s proven performance and strong operating history, a modest ATO debt was acting as a barrier to securing the funding they needed to grow. This is a common scenario we see with businesses who are otherwise in a good position but face blanket restrictions from mainstream lenders due to policy related to all ATO debt.
The unsecured overdraft arranged was suitable because it provided flexibility without requiring property security. That meant the business owners could retain control over their assets while still accessing meaningful working capital — in this case, a $300,000 limit. This flexibility is critical for businesses that might need to respond to seasonal demands, ramp up staffing quickly, or purchase equipment for new contracts, as was the case here.
Key Features of the Loan
- Unsecured Facility: No property or real estate was needed to support the facility, making it faster to access and lower risk from an asset perspective.
- Progressive Rate Discounts: The lender we recommended applies lower rates to businesses with higher turnover. Our client, with turnover in the millions, benefited from this pricing model — and stands to enjoy even better rates as they continue to grow.
- Fast Turnaround: The overdraft was approved and funded within 24 hours, enabling the client to act on opportunities immediately.
- No Locked Repayment Term: As an overdraft, the facility offers revolving credit that can be drawn and repaid as needed — ideal for smoothing cash flow rather than locking into long-term repayments when funds might not be required year-round.
- ATO Debt Workaround: We also proposed a complementary strategy — refinancing the ATO debt over a 5-year term with a lower interest cost than the ATO’s general interest charge. This relieved the client from the immediate pressure of the tax obligation and improved their overall financial position.
Strategic Benefits to the Business
This facility did more than just provide capital — it unlocked the next stage of the company’s growth. With contracts to service and new opportunities to pursue, the business now has the confidence and capacity to execute without worrying about cash shortfalls. Importantly, because the line of credit is unsecured and structured as an overdraft, it can remain in place to support future cash flow needs on an ongoing basis.
Additionally, this transaction demonstrates a core value we bring to our clients: navigating complexity to find simple, effective solutions. While banks saw the ATO debt as a red flag, we saw it as a manageable, temporary challenge — and built a case to show the underlying strength of the business.
Final Word
This case proves that manageable tax debt doesn’t mean you’re locked out of quality funding options. If your business has a strong track record but you’re being knocked back due to ATO obligations or traditional lender criteria, there are smart alternatives available. Let us help you unlock them.
Find Line of Credit Solutions for Your Business
We can help you secure an unsecured overdraft even if you have some manageable tax debt. We'll connect you with the right lenders and help you secure the best rates and terms possible. Reach out today to learn more.
