Business loans when your tax returns or BAS are overdue

It usually starts with one quarter. The bookkeeper leaves, a busy season swallows the admin, or the numbers look bad and nobody wants to see them in black and white. Then one late BAS becomes three, the tax return is a year behind, and when you go to the bank for finance, the first thing they ask for is the thing you don’t have.

Here’s the practical truth: overdue lodgements stop most bank applications, but they don’t stop every lender, and fixing them is more manageable than it feels.

Why do banks decline when lodgements are behind?

A bank’s credit process runs on financial statements. It uses them to test whether the business can afford repayments. With no recent lodged returns, there’s nothing to test, so the application stops before anyone forms a view about your business. Overdue lodgements can also hint at ATO debt that hasn’t been assessed yet, which adds to the bank’s caution.

How can a lender assess without current financials?

Property-secured lenders take a different starting point. They look at:

• The property: its value, what’s owing on it and who owns it.
• The plan to repay: sale of an asset, refinance once lodgements are current, or ongoing cash flow shown in bank statements.
• Bank statements: recent business accounts show real trading even when the returns haven’t caught up.
• The ATO position: a current statement of account shows what’s already assessed and any balance owing.

Property-secured business loans run from $20,000 to $5,000,000 as first mortgages, second mortgages or caveat loans over residential or commercial property. That’s why owners with lodgements behind often start with property. If you already have a home loan or commercial loan with a bank, a second mortgage behind it may avoid disturbing that facility.

Unsecured options, typically $5,000 to $500,000, are sized on turnover and bank statements rather than tax returns. Some can work with lodgements behind; they’ll look closely at account conduct and whether tax is being put aside.

If this sounds like your situation, start a 60-second enquiry and tell us what’s outstanding. There’s no credit check when you first enquire.

Why lodge now, even if you can’t pay?

The ATO is blunt about this. Its guidance for people who can’t lodge or pay on time is to lodge on time even if you can’t pay, and to phone before the due date if you can’t lodge, to reduce the risk of a penalty. There are three practical reasons:

Reason	Why it matters
Penalties	The failure-to-lodge penalty is one penalty unit for each 28 days (or part) a document is late, up to five units, multiplied for medium and large withholders
Director protection	Under the director penalty regime, where PAYG withholding, GST or super guarantee charge isn’t reported within three months of the due date, paying in full becomes the only way to have a director penalty remitted
Lender confidence	Current lodgements are the fastest route back to mainstream finance, and even specialist lenders price and size better when the numbers exist

Lodging also turns an unknown into a known. Lenders, like the ATO, are more comfortable with a clear figure, even a big one, than with a guess.

What’s a sensible catch-up order?

Every business is different, so work it out with your accountant. A common approach:

1. Activity statements first, because they carry GST and PAYG withholding and feed director penalty exposure.
2. Super guarantee position, especially with Payday Super now in force.
3. The most recent income tax return, so a lender can see current profit.
4. Older returns, working backwards.

Our guide on catching up overdue lodgements walks through the order in more detail and how to talk to the ATO while you do it.

Illustrative example: two years behind, funded anyway

Illustrative only, not a real client. The owner of a regional Victorian bakery falls two years behind on returns after her business partner, who handled the books, becomes seriously ill. The BAS are mostly lodged, but the income tax returns aren’t. The bank declines a loan to replace an oven.

She owns the freehold of the shop with a small bank loan against it. A specialist lender offers a second mortgage, funds the oven and the accountant’s catch-up work, and agrees a twelve-month term. The plan is to lodge everything within six months and refinance to a bank once the returns show the business’s real profit.

What if there’s tax owing once the returns are lodged?

That’s common, and it’s better to know the figure than guess it. Once the outstanding BAS and returns are in, the ATO balance becomes clear, and a loan can often pay it out at settlement. Lenders are generally more comfortable with a known tax debt and a plan than with an unknown one. Our page on business loans with ATO debt covers how that payout works and what lenders check first.

Let’s get you funded while the paperwork catches up

Late lodgements turn up in plenty of the files we see, and we’d much rather you mention them than hope they won’t come up. The form takes a minute and there’s no credit check when you first enquire. Nothing is sprayed around the market, and a specialist calls you to plan the funding and the catch-up together.

Please be accurate about what’s outstanding and roughly when it’ll be lodged. That detail decides which lender suits you. See if you qualify →