Business Owners Are Struggling with ATO Debt — a Caveat Loan Could Help

By: Aaron Robbins

The Australian Tax Office has begun the busy work of licking envelopes, and one of those seemingly harmless pieces of folded paper could be headed your way.

Australian business owners have to prioritise outgoings in the form of purchases, bills, and all the costs that accompany running a successful business.

Managing those costs has been made more challenging in recent times. The economy has experienced an ebb and flow that is both inconsistent and unpredictable.

For business owners, profitability, turnover, and margins can change overnight. One of the most trying times for businesses, regardless of size, is tax time!

If you’re one of the thousands of Aussies dreading the postman at this time of year, read on because it is possible to overcome tax debt without facing insolvency — with a caveat loan.

Deferred tax debt

Over the years, the ATO allowed Australian businesses to defer tax debt.

Deferral became a popular option for companies struggling to cope with unpredictable cashflow problems and increased overheads.

The cost of the pandemic and a range of other unforeseen issues have put many Australian companies in poor financial stead.

So far, company structures have protected individuals from handing over the hard-earned money needed to keep their companies afloat. But all that has changed.

If you’re an Australian business that has deferred your tax debts in recent times, it’s important to be aware that collection of those debts has commenced.

Deferred obligations that cannot be fulfilled directly by the company are issued to the directors, who are liable for the repayment.

This liability is known as a Director Penalty Notice (DPN), and essentially, it means there is no hiding from or escaping your company’s tax debt.

As the director of an Australian company, all debts owed to the ATO fall upon your shoulders; shoulders already laden with the burden of staff shortages, interest rate rises and increased cost of basic living.

This is a time when all Australians need a little help rather than being slapped with the cold sting of an ATO reminder notice.

Owning the ATO is stressful enough, but the incurred tax debts passed to company directors will also affect that individual’s credit score and credit file – making applying for a personal or business loan unfeasible.

Before the panic sets in, it’s time to pause and consider your options. If you’re an SME in financial distress and considering insolvency due to impossible repayments, stop.

There is another way.

Talk to your advisors

We always recommend seeking legal or financial advice to understand your liability, the terms, and the available options for increasing cash flow.

If you haven’t already, put a plan in place, so you always have clarity around your finances and how your business is tracking.

When you are clear on your company’s balance, there is less confusion and less chance of a nasty surprise at tax time.

With that in mind, tax debt and other costly hindrances can happen to anyone. The accrued cost of supplier’s price increases, rent increases, wage increases and changing consumer habits can put anyone in financial turmoil.

The personal pressure of enduring tax debts causes difficulties in personal and professional relationships – it’s one of the most stressful things for a business owner to confront. But it doesn’t have to be.

Being realistic about these concerns is the first step in ensuring they are dealt with. Get to know where you stand and the process for repaying ATO tax debts.

You may not be up-to-date with the latest or even be aware that there is a limit on how long payments can be deferred and very few options to suit those you can’t manage to raise the required funds.

Once you have clarity around what you owe, you can access your options.

Private lending and fast caveat loans in Australia

Avoiding banks by sourcing additional income and quickly accessible cash via an independent, private lender means you can pay back the ATO without incurring damage to your personal credit.

You’re already in an undesirable financial position, so being turned away for a personal loan or mortgage is the last thing you need.

Sustaining long-term damage to your company in the form of insolvency is also the last resort – and it’s avoidable.

Even if you have debtors owing you, relying on customers to pay up on time is not an ideal solution.

Redrawing on a personal loan or mortgage may also be risky business. With interest rates soaring, you don’t want repayments piling up.

When times are tough, the regretful decision to turn to insolvency can be made too quickly.

At Diverse Funding Solutions, we help you access a range of lending options.

Don’t jeopardise your company or barter your credit rating for a loan that will only put you deeper into debt.

Our professional, market-leading team members can talk you through how a caveat loan can free up cash flow and allow you to make immediate repayments while keeping your business trading.

Why a caveat loan? Caveat loans explained

Our urgent caveat loans are a legitimate way to leverage existing real estate property to free up cash flow and pay off that deferred debt.

A caveat loan is ideal for businesses with Australian real estate that can be used as security against a loan that allows you to free yourself of debt.

Accessing cash flow using a property you own is an excellent way to release funds without taking on the added encumbrance of substantial interest rates from the banks.

For many businesses with low credit ratings or less-than-perfect history, short term caveat loans take the anxiety out of securing cash flow — caveat loans can help, regardless of credit history.

Our caveat loans secured by real estate are ideal because they allow you to borrow up to 75% of the value of a property.

Ensure all debts are repaid in full — no more hiding from the ATO, or the postman. We discuss every facet of the loan, including our flexible repayment options and your choice of interest structures.

If you’re dealing with a short term cash flow crunch like many business owners are, a caveat loan can help. They’re also much faster to access than other business loans.

We help you apply for a caveat loan and all the paperwork and legal documents are prepared and lodged by specialists, efficiently handled to the highest standards.

Once the loan is in place, funds can be immediately accessed – no waiting, no worrying.

With your ATO tax paid, you are free to continue trading without facing the harrowing ordeal of insolvency. Regain your freedom and invest where needed so your business can thrive well into the future.

How soon can I get a caveat loan?

Short-term caveat loans can be accessed extremely quickly (same-day funds or as fast as 24 hours) because of the nature of the legal caveat lodged on title behind your existing mortgage (first or second mortgage).

How does caveat lending work?

A caveat loan is a type of short term business loan that can be approved for worthwhile business purposes.

The lending criteria is much more flexible than that of traditional bank loans as caveat loans are provided through private lenders.

A caveat is lodged on title immediately, which restricts the sale of the security property without the permission of the caveat loan lender.

With the caveat in place, the lender hands over up to 75% of the equity in the property as a short term caveat loan.

At DFS, we help Australian businesses survive without placing directors in personal financial trouble.

Too many Australians are facing bankruptcy simply because they aren’t aware of the possible options available to overcome debt.

Using our tools and knowledge, we can suggest a range of suitable lending options for your business because you’ve made it this far – and you deserve better.

Contact our friendly and professional team of knowledgeable lenders today to learn more about caveat loans or our range of lending options.

We are here to help and to assist you to release cash flow to pay back your tax debt and experience the joy of watching your profits increase once again.

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