Will you lend to me if I'm on an ATO payment plan?

Is being on a payment plan a problem for lenders?

Less than most people expect. In many cases, it’s a point in your favour.

Here’s why. Plenty of healthy businesses end up owing the ATO at some point — a big BAS after a strong quarter, a tax bill after a good year, PAYG catching up with growth. What separates a worrying file from a reassuring one is what happened next. A business that called the ATO, agreed a plan and has kept every instalment is showing a lender exactly the behaviour they want to see: facing a debt and managing it.

How does a lender factor in the plan?

Mostly by treating it like any other loan repayment.

• Affordability. Your monthly instalment to the ATO comes out of the business’s cash flow, so it reduces how much more the business can comfortably take on.
• Conduct. They’ll check the plan is current. The ATO statement of account shows the balance and payments.
• Direction. A shrinking balance is reassuring. A balance that grows because new BAS aren’t being paid alongside the plan is a warning sign.
• Lodgements. Are your BAS and returns lodged on time? If not, see behind on BAS.

Does the plan affect my credit report?

Not by itself. The ATO can disclose business tax debt to credit reporting bureaus when a business with an ABN has at least $100,000 overdue by more than 90 days and isn’t effectively engaging with the ATO to manage it. Having a payment plan and complying with it counts as engaging. The ATO also gives 28 days’ notice before reporting.

So a plan you’re keeping protects your credit file as well as your relationship with the ATO.

On a plan and wondering what’s possible? Tell us in 60 seconds — no credit check just to ask.

Should I pay the ATO out with a loan?

It’s a fair question, and the answer has shifted recently. ATO interest charges — the general interest charge and shortfall interest charge — incurred on or after 1 July 2025 are no longer tax deductible. That’s now law. For some businesses, this makes a business loan to clear the ATO debt more attractive than it used to be; for others, the plan is still the better option.

Keep the plan	Refinance the ATO debt
Instalments already affordable	Instalments are squeezing cash flow
Balance small or nearly paid	Balance large, plan long
No other borrowing needed	You also need funds for growth
No property or security	Property equity available

Refinancing is a business purpose, and it can be done with property-secured loans from $20,000 to $5,000,000 or, for smaller balances and trading businesses, unsecured options (typically $5,000 to $500,000) sized on turnover. A real person can run the comparison with you in dollars rather than guesses.

What will I need to show?

1. The ATO statement of account showing the current balance and plan.
2. Proof instalments are being paid (bank statements show this).
3. Up-to-date BAS and tax lodgements.
4. Recent business bank statements.
5. What you want the new money for — paying out the ATO, or something else.

An illustrative example

For illustration only; not a real business.

A freight business had a strong year and was hit with a $95,000 tax bill it hadn’t set aside enough for. The owner set up a two-year payment plan and has kept every instalment for nine months. Now a customer wants to double their volume, which needs a second truck.

• The lender sees a plan that’s current and shrinking, with BAS lodged on time.
• The instalment is factored into affordability.
• Equity in the owner’s home secures a loan that pays out the remaining ATO balance and funds the truck deposit, so there’s one repayment instead of two.

When is a payment plan harder to work with?

If the plan has defaulted, the ATO balance keeps growing, or lodgements are overdue, the picture changes. Our ATO debt page covers what happens when there’s no plan or it has fallen over, and our guide to early signs you’ll need funding looks at spotting tax crunches before they arrive.

Does a payment plan affect how much I can borrow?

Yes, in a straightforward way. The ATO instalment is a regular outgoing, so it reduces the room left in your cash flow for a new repayment. A lender looking at an unsecured facility will usually count it just like a loan repayment when sizing a limit.

That leads to a useful question: would the business be better off with one repayment instead of two? Consider:

If you keep the plan and borrow separately	If a loan pays out the plan
Two repayments to manage	One repayment
Limit on new borrowing reduced by the instalment	ATO balance cleared, relationship reset
ATO interest charges keep accruing on the balance	Interest shifts to the new loan instead
Simpler if the ATO balance is small	Often simpler if the balance is large

There’s no single right answer — it depends on the balance, the plan’s length, the total cost of each option in dollars and whether security is available. A real person can lay the options side by side for you. Our guide on early signs you’ll need funding also covers how to see the next tax crunch coming before it becomes a plan.

Ask us about your ATO plan

Keeping a payment plan going while running a business isn’t easy, and it deserves credit. Let’s see whether new funding — for growth or to clear the ATO altogether — makes sense for you.

We don’t run a credit check at the enquiry stage, and your file isn’t handed out to lender after lender. A real person reads it, works on it and calls you. Please tell us accurately what you owe the ATO and whether the plan is current, because that’s what gets you to the right answer the first time. Start here.