Behind on Business Loan Repayments? Your Options in Australia
Business Owners Finance Hub
Missed repayments · Hardship options · Free help
A business-purpose loan does not use the same statutory hardship and default framework as consumer credit. What happens next depends on your contract, any security or guarantee, any code your lender follows, and whether an external complaint path is available. This guide follows the journey from a failed debit through negotiation, enforcement, ATO and creditor pressure, refinance and formal restructuring.
Quick Answer
Behind on a business loan? Call the lender before the next debit, say what you can pay and get any arrangement in writing. Your contract, security and guarantees set the rules, not consumer law. If several debts or your home are exposed, call the free Small Business Debt Helpline.
Also called: business loan arrears, business loan default, business loan hardship, missed business loan repayments.
What should you do first if you cannot make a business loan repayment?
Call the lender before the next debit fails, with your loan documents in front of you and a realistic figure for what you can pay, and ring the free Small Business Debt Helpline alongside it. Early contact usually leaves more options open than waiting for the account to move from arrears into enforcement. Start by working out which stage you are actually in.
Swipe the table sideways to see every column.
| Where you are now | What it usually means | What to do next |
|---|---|---|
| You know the next repayment will not clear | You still have a chance to ask for a change before another dishonour appears on the statements | Contact the lender now, explain the cause, say what you can pay and ask for the response in writing |
| One or more repayments have already failed | The facility is in arrears and fees, re-presentations or default steps may follow depending on the contract | Ask for the current arrears figure, payout figure, default position and the lender's financial-difficulty options |
| A default notice, formal demand or court document has arrived | An enforcement timetable may be running and the document's date matters more than the next scheduled debit | Read the deadline that day, contact the lender and get legal advice where the document is a guarantee demand or court process |
| The loan, ATO, suppliers or super are all falling behind | This may be a whole-of-business financial difficulty or insolvency problem rather than a single-loan problem | Build a full creditor list and cash-flow forecast, call the Small Business Debt Helpline and get restructuring or insolvency advice before taking new debt |
- Find three documents. The loan contract (the repayment clause, the default clause and any guarantee), the direct debit request you signed, and the latest loan statement showing the arrears and fees.
- Work out whether it is a timing gap or a size gap. A slow fortnight before a big payment lands is a timing problem a lender can often work around. A business that cannot carry the repayment on any realistic forecast is a different conversation, covered in the section on a company that cannot pay all of its debts.
- Call the lender and ask for its financial difficulty or hardship team. Say what has happened, what you can pay and when, and ask what it can vary. Make the call before the next debit is due, not after it bounces.
- Get anything agreed in writing. A promise on the phone to hold off is not a variation. Ask for the new arrangement, and what happens when it ends, to be sent to you.
- Stop wrong debits through your own bank. If money is coming out that is outside the authority you gave, your bank can stop it, but tell the lender as well.
- Ring the Small Business Debt Helpline. It is free and confidential, and it matters most when there is more than one creditor or an ATO debt in the picture. Details are in the free help section.
- Do not take a new short-term loan just to make this repayment. Stacking another fast facility on the one in arrears adds another debit to the same account and usually makes the next shortfall bigger. If several facilities are the problem, consolidating business debt is the frame to look at instead.
Have these ready before you call the lender
- The loan contract, the direct debit request and any guarantee you signed
- The latest loan statement, showing arrears, fees and the payout figure if you have one
- Recent business bank statements, so you can explain every dishonour
- A cash flow forecast for the coming weeks, showing when money actually lands
- A list of who you owe, including the ATO, and who owes you
- Your latest BAS or management accounts
Source: Australian Banking Association, Business loans (Financial Assistance Hub), read 21 September 2026. The ABA lists information a bank may ask for when considering the viability of the business, including business planning, position, cash flow, debtors, creditors and tax, and notes a valuation may also be requested. Qualifier: this describes banks; a non-bank lender may ask for different information.
What happens first when a business loan repayment does not go through?
The payment fails at your own bank, before your lender has made any decision at all. That order matters, because the protections most borrowers have heard of, a mandated grace period and a statutory default notice, belong to consumer lending and do not attach to business purpose credit by law. What actually happens is mechanical and it happens quickly.
- The dishonour. Your bank declines the debit because the funds are not there, and the transaction is returned to the lender unpaid.
- Possible dishonour or default fees. Your bank, lender or both may charge a fee if their account terms or loan contract allow it. Check the actual entries rather than assuming a standard fee applies.
- A possible re-presentation. Some lenders may try the debit again under the authority you signed. Check the direct debit request and ask the lender when it will present again so you do not discover the second attempt after another return.
- The arrears. The missed amount sits against the account and the facility is now behind, whatever the next debit does.
- A default or arrears notice, if the lender sends one. Do not assume the consumer-credit notice sequence applies to every business-purpose loan. The practical timetable comes from the contract, the security documents and any code or complaint scheme that applies to your lender. Banks commonly send default notices, and what each letter means is set out below.
The return is also permanent in one place that matters later. It sits on your bank statements, and a dishonour on your statements is one of the first things the next lender looks for. What the lender can actually do once you are behind depends on the security you gave, which is covered in what a lender can take on an unsecured business loan.
Is there a hardship process for a business loan?
There is no single statutory hardship process for business-purpose credit equivalent to the consumer-credit hardship framework. That does not mean a lender cannot help. Your options can come from the contract, the Banking Code or another industry code the lender has adopted, its own financial-difficulty policy, and AFCA where the lender is a member and the complaint is within AFCA's jurisdiction.
Your contract first. Some business loan agreements carry a variation or forbearance clause, and where one exists it is the strongest thing you hold, because it is enforceable. Then any code your lender has signed. Industry codes bind the lenders who have adopted them and nobody else. For a bank that is usually the Banking Code of Practice, and the Australian Banking Association states that under it your bank must consider how it can help with your financial difficulties. Some online non-bank lenders have signed the Australian Finance Industry Association's Online Small Business Lenders Code, which includes financial hardship commitments, and AFIA has proposed folding it into a broader Finance Industry Code covering business finance that its website still describes as being finalised. If no relevant industry code applies, you cannot rely on that code's commitments; the contract and general law still matter, and AFCA access still depends on membership and jurisdiction. Then external dispute resolution, if it is available at all. ASIC states that lenders that only provide commercial loans are not required to have a credit licence and are not legally required to be a member of AFCA, and that if they are not a member you should seek private legal advice.
Sources: ASIC, Information Sheet 207, Disputes about commercial loans, reissued April 2024, read 21 September 2026. Australian Banking Association, Business loans (Financial Assistance Hub), last modified 16 September 2026, read 21 September 2026. AFIA, release of the updated Online Small Business Lenders Code of Practice, dated 2 December 2022, and AFIA, Finance Industry Code page and consultation release of 18 September 2024, all read 21 September 2026. Qualifiers: AFCA membership is decided lender by lender, so check your own lender rather than rely on a general rule. The ABA statement describes banks only. AFIA's own consultation material notes that some of its members are not AFCA members, and its codes are being consolidated, so check your lender's current signatory status and AFCA membership directly.
If a bank agrees to help, the Australian Banking Association lists the options it may be able to offer. A non-bank lender may offer some of the same, but only as far as its contract and policy allow.
- Reducing repayments or restructuring the loan. The repayment or the shape of the loan changes, and a longer term lowers each repayment but can raise the total cost.
- Deferring principal repayments. In most deferral arrangements the repayments you would have made keep accruing and are added to the loan, to be paid once the deferral ends.
- Waiving fees and charges. Dishonour and default fees are the ones to ask about first.
- Consolidating debt. Several debts are combined so the repayments are more manageable.
- Temporary extra finance. Short-term funding such as an overdraft to cover a cash flow gap, which adds to what you owe.
- A different repayment frequency. Not on the ABA list, but a common request where the problem is timing, covered in the next section.
The ABA also states that if you and your bank agree a new arrangement, the bank will give it to you in writing, including your new repayments and what happens at the end of the arrangement, and that if the bank cannot change your loan arrangement it needs to tell you why in writing.
Source: Australian Banking Association, Business loans (Financial Assistance Hub), read 21 September 2026. Qualifier: the ABA describes what banks may offer; every option depends on the bank and the borrower's circumstances, and a lender outside the Banking Code may use different processes.
What should you have ready before asking a bank for help?
Go into the call with evidence, not just the request. The Australian Banking Association says a bank may assess the viability of the business using your business plan, an updated statement of position, cash flow, debtors and creditors, tax information and, where relevant, a valuation. Its current guidance also says banks may look at inventory and other documentation. A non-bank or private lender may ask for a different pack, but the same principle applies: show what caused the shortfall, what the business owes, what is due in, and why the proposed arrangement is sustainable.
Have this ready before the lender call
- Current business plan and a short explanation of what changed
- Updated statement of position and recent trading figures
- Cash-flow forecast showing the proposed repayment arrangement
- Debtors, creditors and any overdue supplier balances
- ATO and other tax information, including payment arrangements
- Recent bank and loan statements so arrears and dishonours can be reconciled
- Any valuation the lender reasonably needs for secured property or business assets
Source: Australian Banking Association, Business loans, read 21 September 2026. Qualifier: this is the ABA's guidance for banks. Recent bank and loan statements are included here as practitioner preparation because lenders need to reconcile the actual account conduct; a non-bank lender's formal document request can differ.
That is the honest position, and it is why the free services in the last section matter more here than they would on a home loan. If the facility causing the problem is an overdraft or a line of credit that the bank has pulled rather than a term loan, the sequence is different and is covered in what happens when a bank recalls a facility or overdraft. For how these facilities are put together in the first place, see our guide to how working capital facilities are structured.
From our broking, indicative
Across the deals we place, three things repeat whenever a borrower raises repayment difficulty with a lender.
- The lender asks for recent trading figures and bank statements before it will discuss anything, so the conversation usually starts with gathering documents rather than with a decision.
- We read the loan contract before making the call, and in a set order: the repayment clause, then the default clause, then the guarantee, then the security documents. What can be varied is in the paperwork, not in the conversation.
- A borrower who makes contact before the first dishonour has more options on the table than one who makes contact after the third.
Indicative only, based on deals we have placed, not a quote and not an offer, and not a statement of any lender's policy. Actual outcomes depend on lender policy and your circumstances at the time. Not financial advice.
What if the lender refuses hardship help or keeps enforcing?
Ask for the decision and reasons in writing, use the lender's internal complaint process, and then check whether the lender is an AFCA member. A refusal is not the end of the process for every borrower, but the next step depends on the lender: ASIC says commercial-only lenders are not legally required to belong to AFCA.
Check AFCA's monetary jurisdiction as well as membership. AFCA's current small-business guidance says it cannot consider a complaint about a small-business credit facility that exceeds $6.3 million for complaints lodged on or after 1 January 2024. That limit applies to the credit facility, not simply the overdue amount, so check the current AFCA Rules before relying on the scheme.
If an eligible complaint is registered, recovery normally changes while AFCA considers it. AFCA says a financial firm is required to suspend collection or recovery action once the complaint has been registered. Its current Rules guidance says the firm generally must not begin related legal proceedings, continue debt recovery beyond what is necessary to preserve its rights, recover the disputed debt, take action against security for that debt, assign the recovery right or list a default while the complaint remains open. AFCA can consent to some action, and interest can continue. A court deadline that has already arrived still needs immediate legal advice.
- Get the position in writing. Ask what was declined, why, what amount the lender says is overdue, what it expects next, and whether any enforcement action is paused or continuing.
- Make an internal complaint if the response is wrong, incomplete or unreasonable. Separate a complaint about conduct, fees, unauthorised debits or the handling of assistance from a simple request for more time.
- Check AFCA membership rather than assuming it. AFCA can consider small-business financial-difficulty complaints against member firms, including complaints about a declined request, no response, default notices and some continuing recovery action.
- Act immediately if court proceedings have started. AFCA tells small businesses to contact it immediately if a Statement of Claim or notice of legal proceedings arrives, but court deadlines still need legal advice and cannot be ignored.
- If AFCA is unavailable, get private legal advice early. ASIC specifically recommends this where the commercial lender is not an AFCA member. If enforcement is against you as a guarantor, read what happens when a personal guarantee is called before a demand deadline expires.
Sources: ASIC, Disputes about commercial loans, reissued April 2024; AFCA, Financial hardship complaints; AFCA, Small businesses with a financial complaint; and AFCA, How we resolve complaints and our Rules, all read 21 September 2026. Qualifier: AFCA access depends on membership, jurisdiction, time limits and the facts of the complaint. The $6.3 million figure is AFCA's current rounded facility threshold for complaints lodged on or after 1 January 2024. This section is general information, not legal advice.
Can business-loan arrears put your house or personal assets at risk?
They can, but not for one universal reason. The first question is who borrowed, and the second is what you signed. A sole trader is personally liable for the business's debts. A company is a separate legal entity, but a director or owner can still create personal exposure by giving a guarantee or offering personal property as security.
Swipe the table sideways to see every column.
| Structure or document | Where the debt starts | What to check now |
|---|---|---|
| Sole trader | The owner and the business are not separate legal entities, so the owner is personally liable for the business debts | Check what assets are exposed, any security already granted and whether the debt problem is broader than this one loan |
| Partnership | The partnership is not a separate legal entity in the same way a company is, and partners can be liable for partnership debts | Read the partnership agreement and loan documents and get legal advice on each partner's exposure |
| Company, no personal guarantee or personal security | The company is the borrower and is a separate legal entity | Do not assume that ends every personal risk: directors still have duties when the company is in financial difficulty |
| Personal or director guarantee | The company may owe the loan first, but the guarantor has separately promised to answer for the guaranteed obligations | Find the guarantee, any cap or limitation, the demand provisions and the assets that could be exposed if a judgment is obtained |
| Home or other personal property given as security | The lender may have direct security rights over that property under the mortgage or security document | Read the security document and get legal advice before a formal demand or enforcement deadline expires |
For banks, the Australian Banking Association says that if asset sales do not repay the full business loan, the bank may enforce a guarantee for the shortfall. That is a bank-industry description, not a statement that every lender follows the same sequence. If the family home is involved, read the family home as business-loan security; if the exposure comes from a guarantee, see how a director's guarantee works and what happens when a personal guarantee is called.
Sources: ASIC, Sole trader? Partnership? Company? Trust? and Australian Banking Association, Business loans, read 21 September 2026. Qualifier: liability under a particular guarantee, mortgage or security document depends on its terms and applicable law. Get legal advice about a demand or threatened enforcement.
Can you change how often you repay, and what does the lender change when you do?
You can ask, and whether the lender agrees depends on the contract and its policy. Do not assume that changing or cancelling the direct debit changes the repayment obligation itself. A change to repayment amount, frequency or term may need a formal variation or replacement repayment schedule, and the lender may re-check guarantees, security and current financial information before agreeing.
Three things typically come back into view. The guarantee, because a guarantor who signed up to one set of terms may need to acknowledge the new ones, and a guarantee is the document with the sharpest personal consequences, as what happens when a personal guarantee is called sets out. The general security agreement, because the description of the secured obligations has to still cover the varied facility. Any registrations on the Personal Property Securities Register, because a registration that was made against the original facility may need amending or re-registering so it continues to describe what is actually secured.
What we see most often is that the frequency is negotiable and the total is not. A lender that will move a borrower from weekly to monthly debits is usually solving a timing mismatch rather than reducing what is owed, and it will want to see why the new timing matches the business. If the underlying problem is the size of the facility rather than the timing, that is a different conversation, and working capital facilities for business owners is the better starting point.
What can you do if a lender debits more than you agreed?
Check the debit against the direct debit request you signed, dispute anything outside it with the lender in writing, and ask your own bank to stop further debits if they keep coming. The direct debit request is the authority, and it has edges. It names an amount or a method of calculating one, a frequency and an account, and anything outside those edges is a claim you can raise rather than a charge you simply have to absorb. The practical problem is that most borrowers never re-read the authority, so they cannot tell which of the two columns below they are actually in.
Inside the authority you gave
- The scheduled debit on the scheduled day, for the scheduled amount
- A re-presentation of a returned debit, where the authority permits it
- Fees the loan contract expressly allows to be debited
- A varied amount after a variation you signed
- Debits continuing after arrears, because arrears do not suspend the authority
Outside it, and worth a claim
- A higher amount with no variation you agreed to
- A second debit in a period that allows only one
- Debits from an account you never nominated
- Debits continuing after you cancelled the authority
- Amounts that do not reconcile to the loan statement
Reconcile before you complain. Pull the debits against the loan statement and the authority, and be specific about which debit you say was wrong and why, because a general objection gets a general answer. Where several facilities are debiting the same account the arithmetic is genuinely hard to follow, and that stacking problem is covered in our guide to consolidating business debt. Note too that a wrong debit is a separate question from what the lender can recover overall, which turns on the security and is covered in what a lender can take on an unsecured business loan.
How do you stop a direct debit through your own bank?
Your own bank can stop it, and you do not need the lender's agreement to ask. This is the part of the system that works the same way whether the debit is on a business loan or a gym membership, and it is the fastest lever most borrowers have. ASIC Moneysmart states that once the bank receives your request it has to stop the payments and forward your cancellation to the service provider's bank. Ask for the cancellation in writing and ask for a letter confirming the request.
Moneysmart also states that if your account is debited after you have asked your bank to cancel the direct debit, your bank cannot charge you overdraft fees to cover that debit. That is a useful protection and it is narrower than it sounds, because it addresses the fee rather than the debit.
Source: ASIC Moneysmart, Direct debits, last updated 17 September 2026, read 21 September 2026. Qualifier: this is consumer-facing guidance from the regulator. The page specifies no timeframe for the bank to act and no time limit for making a claim, and it does not displace anything in your loan contract.
Swipe the table sideways to see every column.
| Who you contact | What they must do | What it does not fix |
|---|---|---|
| Your own bank | Stop the payments and forward your cancellation to the service provider's bank, once it receives your request (Moneysmart, 17 September 2026) | The debt and the loan contract are untouched. The money is still owed and the arrears still build |
| Your lender | Its obligations depend on the loan contract, the direct debit authority and any law or industry code that applies to that lender | Cancelling a debit without telling the lender can itself breach the loan terms, so tell them in writing |
| The lender's bank | Receives the cancellation forwarded by your bank (Moneysmart, 17 September 2026) | It does not decide whether a debit was authorised, and it is not a complaint channel for you |
| AFCA | Considers the complaint only if your lender is a member of it | It cannot help if the lender is not a member. ASIC's guidance in that case is to seek private legal advice |
| A financial counsellor | Free, independent and confidential advice on the debt behind the debit (business.gov.au) | A counsellor cannot order a refund or bind the lender to anything |
Sources: ASIC Moneysmart, Direct debits, 17 September 2026, read 21 September 2026. ASIC, Information Sheet 207, read 21 September 2026. business.gov.au, Small Business Debt Helpline, read 21 September 2026. Qualifier: none of these routes pauses the loan itself, and cancelling a debit is a payments step rather than a change to what you owe. Stopping a debit while you remain in arrears does not stop the arrears growing.
What do the letters from your lender mean, and how long do you have?
Each letter is a step further along, and each has its own clock. For a bank, the Australian Banking Association says a default notice usually gives 30 days to come to an arrangement, or 14 days for equipment finance, and a Statement of Claim needs legal advice within four weeks at the latest. For a non-bank lender, the periods come from your contract, so read the date printed on the letter itself.
Swipe the table sideways to see every column.
| Letter | What it means | What to do, and when |
|---|---|---|
| Missed payment or arrears reminder | The account is behind. It is contact from the lender, not a legal step | Ring the number on it and ask for the financial difficulty team. No period is set by law for business credit |
| Default notice | A formal warning that the account is in default. For banks, usually 30 days to come to an arrangement, or 14 days for equipment finance (ABA) | Read the deadline in the notice and make contact inside it. If no arrangement is reached, a bank may start legal action (ABA) |
| Demand for the full payout or accelerated debt | The lender says an event of default under the contract has made the full outstanding balance due, rather than just the missed instalments | Check the default and acceleration clauses, the payout amount and any cure period immediately. If the lender is demanding the whole balance, get legal advice before assuming another repayment will put the facility back on track |
| Security enforcement, repossession or receiver notice | The lender is moving from repayment recovery to enforcing rights over secured assets, mortgaged property or company security | Treat it as urgent. The exact rights and timing come from the security documents and applicable law. If a receiver has been appointed, read what a receiver appointment means and get legal advice on the specific notice |
| Formal demand on a guarantee | The lender is asking a guarantor to pay. Banks give the borrower a copy of any formal demand or default notice sent (ABA) | The guarantor should get legal advice on the demand before the date in it. See what happens when a personal guarantee is called and how a director's guarantee works |
| Statement of Claim | Court proceedings setting out how much the lender claims you owe and why (ABA) | Get legal advice as soon as possible, within four weeks at the latest. Doing nothing can let the court enter judgment against you (ABA) |
| Creditor's statutory demand | A demand served on a company that can lead to a winding up application if it is not dealt with | It runs on a strict deadline. Read a statutory demand and its 21 days the day it arrives |
| Farm debt mediation notice | For a loan secured over farm property, an invitation to mediate that state law requires in the states with a scheme before a covered farm mortgage is enforced | Respond in writing by the deadline on the notice and call the Rural Financial Counselling Service. See farm debt mediation |
| Director penalty notice | An ATO notice that can make a director personally liable for certain unpaid company amounts | Treat it ahead of the loan, because it carries a personal deadline. Read the director penalty notice guide |
Source: Australian Banking Association, Business loans (Financial Assistance Hub), last modified 16 September 2026, read 21 September 2026. Qualifiers: the default notice periods and the four week advice point are the ABA's description for bank customers, not a legal rule for every lender, and the time to respond to court documents is set by the court named on them. Legal costs relating to a Statement of Claim are added to the loan balance, the ABA says, and you can still try to reach an arrangement with the bank after one arrives. This is general information, not legal advice.
When does a missed repayment become a commercial credit default?
The OAIC does not publish a general dollar or days threshold for commercial credit information. Whether and when business-loan arrears are reported therefore cannot be read from the consumer default rules. The OAIC says the credit-reporting requirements generally apply to consumer credit information rather than commercial credit information, which is instead handled under the Australian Privacy Principles where the organisation is bound by them. That is why the familiar consumer thresholds and notice sequence should not be copied across to a business-purpose loan.
This is the most misunderstood point about business credit files, and it is worth being blunt about it: the consumer thresholds are not the business rule. The table below puts the two side by side, and the consumer column is labelled so it cannot be mistaken for what applies to your business loan.
Swipe the table sideways to see every column.
| The question | Commercial credit, your business loan | Consumer credit only, does not apply to a business loan |
|---|---|---|
| Which rules cover the information | The Australian Privacy Principles, where the organisation handling it is bound by them (OAIC) | The credit reporting provisions, which the OAIC states generally apply only to consumer credit information |
| Minimum overdue amount before a default can be listed | No threshold is published by the OAIC for commercial credit information | Consumer rule only: the overdue payment is equal to or more than $150 |
| Minimum days overdue before a default can be listed | No threshold is published by the OAIC for commercial credit information | Consumer rule only: the payment has been overdue for at least 60 days |
| Notices required before a listing | No notice sequence is published by the OAIC for commercial credit information | Consumer rule only: a first notice, a second at least 30 days later, then at least 14 days before listing and no delay beyond three months |
| Accuracy obligation on the organisation holding it | Reasonable steps to make sure the information is accurate, up to date, complete and relevant for the purpose (OAIC) | Covered by the credit reporting provisions rather than by the Australian Privacy Principles |
| How long a listing stays once you have paid it | Five years even when the overdue amount has been paid, with the status updated to paid, as Equifax states for its own register (Equifax) | Not covered in this guide, because it does not apply to a business loan |
Sources: OAIC, Commercial credit information and OAIC, Repayment history and defaults, read 21 September 2026. Equifax SwiftCheck, How long will a default be listed on a credit file, read 21 September 2026. Qualifiers: the consumer column is reproduced only to show what does not apply to a business loan. The OAIC states no retention period for commercial credit information, so the five year figure is Equifax's published statement about its own register, not a general rule, and other bureaus may differ.
So what actually has to be true before a commercial default appears against your business? Not a threshold, because none is published. These four things instead.
- A credit provider decides to report it. There is no published trigger obliging or preventing it, which is why practice differs sharply between banks and non-bank lenders.
- Your loan contract permits the disclosure. This is usually buried in the privacy consent you signed at application rather than in the default clause.
- The lender is satisfied the amount is genuinely owed. The accuracy obligation under the Australian Privacy Principles bites here, and it is the basis on which you would ask for a correction.
- It is recorded with a bureau. Once listed, Equifax states a commercial default stays for five years even after payment, with the status updated to paid.
Bank practice is not uniform, and at least one major bank publishes a narrower position. It states that for business products such as a business loan or line of credit it will not report any missed or late payments to a credit reporting body while you are being assessed for financial difficulty assistance, or while you are meeting a financial difficulty assistance agreement. Both of those conditions are part of the statement and neither can be dropped: it is protection during an assistance process, not a general promise never to report business arrears.
Source: Commonwealth Bank, Financial hardship support for your business, read 21 September 2026, no last-updated date displayed. Qualifier: this is one lender's published policy about its own products and it binds no other lender. Check your own lender's published position rather than assuming it matches.
For what a listing actually does to the next application, see how lenders read defaults and late payments, and to check what is on file start with your business credit report. If a default is already recorded, the lenders who will still look are covered in business loans after bad credit.
What if you owe the ATO, suppliers or super as well as the business loan?
Stop treating the problem as one missed loan repayment. Once the loan, tax, super or key suppliers are all falling behind, the useful question is whether the business can meet all of its debts as they fall due and which deadlines create personal or legal consequences. Build one creditor map before you decide who gets the next dollar.
- List every debt and its next trigger. Record the balance, arrears, next due date, security, personal guarantee and any formal notice already received.
- Keep tax and super lodgements current even if payment is difficult. Late payment and late lodgement create different problems. The ATO says to contact it when you cannot pay by the due date, and repeated defaults on agreed payment plans can lead to firmer action.
- Do not ignore director-level tax exposure. The ATO can issue director penalty notices for unpaid company PAYG withholding, GST and super guarantee charge. If one has arrived, read the director penalty notice guide immediately rather than treating it as another supplier bill.
- Separate a viable debt-structure problem from an insolvency problem. If the business can trade profitably once repayments are restructured, refinance or consolidation may be worth assessing. If it cannot meet debts on a realistic forecast, the next call is restructuring or insolvency advice, not another short-term facility.
- Use the free counsellor for the whole picture. The Small Business Debt Helpline says its counsellors can help with business and personal debts, talk to lenders and creditors, and negotiate repayment arrangements.
Sources: Australian Taxation Office, If you don't pay and Small Business Debt Helpline, Loan Repayments, read 21 September 2026. Qualifier: ATO enforcement and director-penalty consequences depend on the type of liability, lodgement history and notice received. Get tax or legal advice about a specific notice.
What if the company cannot pay all of its debts as they fall due?
If the company cannot pay its debts as they fall due, stop treating the issue as a choice about which creditor to keep happy. ASIC says early action matters because delay can reduce the options available and increase personal risk for directors. Get advice on solvency, restructuring and the company's future before using new debt to move arrears from one creditor to another.
Should you keep paying one lender while other creditors wait?
Not automatically. If the company is insolvent when you pay and is later wound up, a liquidator can examine some payments to unsecured creditors as possible unfair preferences. Whether a payment is recoverable depends on the legal tests and facts, so this is a point for a solicitor or registered liquidator rather than a payment-order rule you should try to apply yourself.
The look-back, as ASIC publishes it
- Six months: The period before the liquidation is taken to have begun, through to the liquidator's appointment, over which a payment to an unsecured creditor may be examined as an unfair preference
- Three months: The narrower period that applies instead where the liquidator adopts the simplified liquidation process
- $30,000: The floor under simplified liquidation, below which recovery does not apply to total payments to an unrelated creditor
Source: ASIC, Liquidation, a guide for creditors, last updated 17 December 2024, read 21 September 2026, corroborated on six months by ASIC, Insolvency, a glossary of terms, 7 March 2024, read 21 September 2026. Qualifier: these are the periods ASIC publishes for unsecured creditors, and a preference claim also requires that the company was insolvent at the time and that the creditor received more than it would have in a dividend. Different periods can apply to related parties and are not stated here. This is general information and not legal advice, and whether a particular payment is recoverable is a question for a solicitor or a registered liquidator.
The practical reading is narrower than the panic it usually causes. Paying an ordinary supplier in the ordinary course while the business is solvent is not the problem. The risk concentrates where the business is already insolvent, or is pushed into insolvency by the payment, and one creditor is singled out because they are the loudest or because the relationship matters most. Directors often single out the lender with the weekly debit for exactly that reason.
ASIC's current message to small business directors is the same one, made from the other side. It names the warning signs as cash flow pressure, overdue tax or superannuation, unpaid suppliers and reliance on personal funds, and it asks directors to seek advice early, avoid taking on debts the company has no realistic basis to repay, and be wary of quick fixes that only buy time. It also notes that small business restructuring is more likely to be useful when advice is sought before the position has deteriorated too far.
Source: ASIC, Helping small business directors respond early to financial difficulty, Commissioner article displayed 25 August 2026, read 21 September 2026. Qualifier: this is ASIC's guidance to directors of companies, and ASIC's Regulatory Guide 217 is its detailed guidance on the duty to prevent insolvent trading. Whether a particular company is insolvent is a question for a registered liquidator or solicitor.
Borrowing more does not fix an insolvent business. If the debts cannot be paid as they fall due, another facility moves the problem forward rather than solving it, and it can deepen the loss for everyone owed money, including you if you have guaranteed it. That is the point at which the answer is advice rather than finance, and the Small Business Debt Helpline on 1800 413 828 is free, independent and confidential.
When does small business restructuring become relevant?
For an incorporated small business, formal small business restructuring can become relevant before liquidation if the company meets the eligibility rules. ASIC states that, when the restructuring practitioner is appointed, total company liabilities must not exceed $1 million and the director-history conditions must be met. Before a restructuring plan can be proposed, due employee entitlements must have been paid and required tax returns, notices and statements must have been given. Tax debt itself does not have to be paid before the plan is proposed.
Source: ASIC, Small business restructuring and the restructuring plan, page dated 18 June 2025, read 21 September 2026. Qualifier: the eligibility rules have exceptions and technical definitions, and appointment of a registered restructuring practitioner is a formal insolvency process. Get advice on the company's actual eligibility.
A restructuring appointment and a restructuring plan do not affect a secured lender in the same way. During the restructuring period, ASIC says third parties including secured creditors generally cannot exercise property rights or enforce security without the restructuring practitioner's written consent or leave of the court. ASIC also says a creditor generally cannot enforce a company liability guarantee against a director, their spouse or a relative during that restructuring period without court leave.
Once a restructuring plan is made, do not assume the mortgage or other security has disappeared. ASIC says a secured creditor is only bound in specific ways, and the existence of the plan does not itself stop the secured creditor from realising or dealing with its security unless the creditor accepted the plan and the plan prevents that action, or the Court orders otherwise. The temporary guarantee moratorium also ends when the plan is entered into or the restructuring otherwise ends. This is why a property-secured business loan needs separate advice even where the unsecured-creditor plan looks workable.
Source: ASIC, Small business restructuring and the restructuring plan, page dated 18 June 2025, read 21 September 2026. Qualifier: secured-creditor rights depend on the security, its value, any consent to the plan and any court order. This is general information, not legal advice.
If the pressure has already escalated past the informal stage, the sequence is set out elsewhere: a statutory demand and its 21 days, a winding up application once it is filed, and a receiver appointed to your company. Each of those is a different clock from the one your loan contract is running.
Can refinancing or consolidating get you out of arrears?
Sometimes, and only when the business can carry the debt. Refinancing can help when the problem is timing, or several short-term facilities debiting the same account, and the business is still trading at a profit. It does not help, and can deepen the loss, when the business cannot pay its debts as they fall due, because a new loan only moves the problem forward.
When refinancing can help
- Several weekly or daily debits are landing before customers pay
- The business is profitable, but the repayment timing does not match its cash flow
- An expensive short-term facility can be replaced with a longer, cheaper one
- The arrears have a clear cause that has already been fixed
When it will not
- The business cannot pay its debts as they fall due on any realistic forecast
- The new loan only covers this month's repayments on the old one
- A statutory demand or winding up application is already running
- The plan depends on a sale or a contract that has not happened yet
What will a new lender check if the business is already in arrears?
A refinance application has to explain the problem rather than hide it. Expect the new lender to focus on the current payout and arrears, recent bank conduct, the cause of the missed payments, ATO and other creditor balances, current cash flow, any security and guarantees, and why the new structure leaves the business able to meet future obligations. A lower weekly repayment is not enough if the total debt or underlying trading loss is still growing.
Before you approach a refinance lender
- Get a current payout figure and arrears statement from every facility being refinanced
- Reconcile recent dishonours and explain the event behind each one
- List ATO debt, supplier arrears and any payment plans that continue after settlement
- Show a cash-flow forecast after the proposed refinance, not before it
- Compare total cost, term, security and guarantees, not just the next repayment amount
- Do not submit multiple rushed applications simply to see who says yes
Apply selectively rather than everywhere at once. Moneysmart states that applications for business loans stay on your credit report for five years, and that too many new credit applications in a short time can lower your score, so one well prepared application usually beats five rushed ones.
Source: ASIC Moneysmart, Credit repair, last updated 31 August 2026, read 21 September 2026. Qualifier: this describes the personal credit report of an individual applicant or guarantor; how a lender weighs enquiries varies by lender.
The next lender sees everything the last one did. Dishonours sit on your bank statements, arrears show on the loan statement, and any recorded default appears on the file, so how a lender reads dishonours on your statements is worth understanding before you apply. In our experience the lenders prepared to look at a file in arrears want three things: the reason it happened, what has changed, and evidence from recent statements that the change is working. Where a default is already recorded, business loans after bad credit covers who still lends. Where the issue is several facilities at once, consolidating business debt sets out how that is structured, and working capital facilities covers the replacement options.
Who helps a small business behind on a business loan, for free?
The Small Business Debt Helpline, on 1800 413 828, is the first call when the problem is bigger than one facility. Its own loan-repayments guidance says its trained small-business financial counsellors can help you understand the contract, talk to lenders and creditors, negotiate repayment arrangements, ask for hardship variations and connect you with legal or other support. The service is free, independent and confidential.
The services below do genuinely different things, and the right one depends on whether your problem is the debt, a dispute, or the company itself. We send borrowers to the helpline more often than to anyone else, because it is the only one of them that will sit with the whole picture rather than one facility.
Swipe the table sideways to see every column.
| Service | What it does | What it will not do |
|---|---|---|
| Small Business Debt Helpline, 1800 413 828 | Free, independent and confidential small-business financial counselling. It can help you understand the loan, talk to lenders and creditors, negotiate repayment arrangements and ask for hardship changes (SBDH) | It is not a lender and cannot force a creditor to accept an arrangement or replace your own lawyer on court or guarantee issues |
| Rural Financial Counselling Service, 1300 771 741 | Free, independent and confidential advice for farmers and rural and regional small businesses, from rural financial counsellors (ABA) | It does not lend, and it is not a complaints body |
| ASBFEO Dispute Support | An online referral tool that routes a small business to the most appropriate resolution service, and routes banking and financial disputes to AFCA (ASBFEO) | The page does not address what happens where the other party belongs to no external dispute scheme, so do not assume it resolves that case |
| AFCA | Considers complaints about member firms. AFCA's rules define a small business as a primary producer or other business with fewer than 100 employees (ASIC) | It cannot consider a complaint about a lender that is not a member, and commercial-only lenders are not required to be members |
| State small business commissioners | Local dispute support and referrals through the ASBFEO network, in New South Wales, Victoria, Queensland, South Australia and Western Australia (ASBFEO) | They are not credit regulators and they do not set or override lender policy |
Sources, read 21 September 2026: Small Business Debt Helpline, Loan Repayments; Australian Banking Association, Business loans; ASBFEO Dispute Support and Small Business Commissioners; ASIC, Disputes about commercial loans; and AFCA, Small business complaints. Qualifier: AFCA access depends on membership and jurisdiction. Legal proceedings, guarantee demands and insolvency questions may need separate legal or registered-practitioner advice.
Be careful who you pay. Moneysmart states that you have a right to get credit report errors fixed for free and do not need to pay a credit repair company, that paying one may not improve your score, and that you should check any such company is licensed on ASIC's professional registers before dealing with it (Moneysmart, updated 31 August 2026, read 21 September 2026). Be just as careful with anyone who contacts a director once arrears or court action appear, offering to make the debt disappear or to move assets out of the company. Moving assets away from creditors can expose a director to serious legal risk, and a formal insolvency appointment can only be taken by a registered practitioner, so check the adviser's registration before you pay anything. The free services above are the safer first call.
Two specific problems have their own routes rather than this one. If what is actually behind is an arrangement with the ATO, start with what happens when an ATO payment plan defaults, and if a notice has arrived about unpaid amounts withheld from wages or superannuation, read the director penalty notice guide before anything else, because that one has a personal deadline attached. Where the real issue is several facilities debiting at once, consolidating business debt is the better frame.
Business-loan arrears are not one problem. They can be a short timing gap, a contract or debit dispute, a guarantee and security issue, a credit-reporting problem, or the first visible sign that the business cannot meet all of its debts. The right response changes with that stage. Start with the contract and cash flow, identify every creditor and personal exposure, use the lender's assistance and complaint process where available, and move to legal or restructuring advice when formal enforcement or insolvency risk appears.
Key takeaway: solve the underlying cash-flow and liability problem, not just the next debit. Early contact matters, but so does knowing when the problem has moved beyond finance.Frequently asked questions
If you default on a business loan in Australia, the lender can use the remedies available under the loan contract and security documents, which may include default charges, demanding repayment, enforcing security or calling on a guarantee. Do not assume a consumer-credit notice sequence applies to every business-purpose loan. What happens next depends on the contract, security, applicable code and any complaint process available.
Your home can be at risk if it was given as security, or if you have personal liability under a guarantee and the lender later obtains and enforces rights against you. A company debt does not automatically make every director's home security. Check the mortgage, guarantee and security documents before assuming either way.
Ask for the decision and reasons in writing, then use the lender's internal complaint process. If the lender is an AFCA member and the complaint is within AFCA's jurisdiction, AFCA may be able to consider a small-business financial-difficulty complaint. Commercial-only lenders are not legally required to be AFCA members, so check membership rather than assuming it.
Yes. ASIC states that a sole trader and the business are not separate legal entities, so the owner is personally liable for the business's debts. A company is different because it is a separate legal entity, although guarantees, personal security and directors' duties can still create personal exposure. See what a working capital loan really costs.
It can affect credit information associated with you, but a company business loan does not automatically become a consumer repayment-history listing. The OAIC says a credit report may include commercial credit information where a person has applied for or received commercial credit. Check both the business or commercial file and your personal file rather than assuming they show the same information.
The OAIC does not publish a general retention period for commercial credit information. Equifax states that commercial credit defaults on its own register stay for five years even after the overdue amount is paid, with the status updated to paid. Treat that as Equifax's published rule for its register, not a universal rule for every bureau.
Treat it as a whole-of-business debt problem rather than choosing whichever creditor is calling the loudest. The ATO says unpaid amounts can attract general interest charge and repeated defaults on agreed payment plans can lead to firmer action. Keep lodgements current, map every debt and deadline, and get advice before replacing one overdue debt with another loan. See what a working capital loan really costs.
If financed equipment is security for the facility, default can lead to enforcement rights under the contract and security documents. For bank customers, the Australian Banking Association says a default notice period is usually 14 days for equipment finance. Read the actual notice and contract because other lenders and structures can differ. See the protections a business borrower has.
Not if it only provides commercial loans. ASIC states that commercial-only lenders are not legally required to hold a consumer credit licence or be AFCA members, although some join voluntarily. Check the AFCA member search or ask the lender before relying on AFCA as the complaint path. See the working capital loan guide.
Sometimes. A refinance is more likely to solve the problem when the business remains viable and the new facility genuinely improves the repayment structure, total cost or timing. If the business cannot meet its debts as they fall due on a realistic forecast, another loan can delay rather than fix the problem and restructuring or insolvency advice may be the more appropriate next step. See worked repayments on common loan sizes.
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