Business loans after bankruptcy or a Part IX debt agreement: what AFSA rules allow, how long records last, and which finance opens first after discharge.
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Business Loan After Bankruptcy · Part IX Debt Agreement · Discharge
Discharge starts the clock, it does not stop it. Here is what you can do in business while bankrupt, how lenders read bankruptcy, debt agreements and company liquidation side by side, and which finance usually opens up first once you are through it.
Quick Answer
A business loan after bankruptcy is possible, but it rarely comes first: lenders read the public record, the time since discharge and how your accounts have run since, so smaller secured facilities usually open before anything else. Specialist bad credit business loans start there, and unsecured lending typically comes later, though the timing varies by lender.
Also called: discharged bankrupt business loans, business finance after a debt agreement. The first is about finance once a bankruptcy has ended; the second covers owners who used a Part IX agreement instead, which lenders read differently.
Can you get a business loan after bankruptcy?
Discharged owners do get business loans, usually from a specialist non-bank lender before a major bank, and usually once the bankruptcy has formally ended. Take an illustrative case: a sole trader who went bankrupt after a failed contract, kept working through the bankruptcy period and is now discharged with a steady run of jobs. The bankruptcy is over, but the record of it is not, and that record is what every lender sees first.
This is why discharge starts the clock, it does not stop it. AFSA says bankruptcy normally lasts 3 years and 1 day from the day it accepts the application, and a trustee can object to extend it for up to 8 years. Once it ends, lenders start counting from the discharge date: how long ago, what has happened since, and whether anything new has gone wrong.
For a lender, the question is rarely whether you were bankrupt. It is whether the business has been run cleanly since, whether the loan is secured by something with a clear value, and whether you told the lender before their search did. The bad credit business loans page sets out how specialist lenders work through files like this.
Do major banks lend to discharged bankrupts?
Major banks generally prefer to wait until the bankruptcy has aged off the credit report and the business has a clean track record behind it. Non-bank lenders and specialist funders will typically look sooner, priced for the extra risk. The bad credit tiers post explains where an insolvency history usually sits in that ladder.
What can you do in business while you are still bankrupt?
While you are still bankrupt you can usually keep working and run a business as a sole trader, but with restrictions that shape any borrowing. AFSA sets these out in its guide to income and employment during bankruptcy, and they matter before any lender conversation.
- Can you borrow while bankrupt? If you apply for credit over a set amount, which AFSA indexes and publishes, you must tell the credit provider you are bankrupt. In practice, few lenders will extend new business credit during the bankruptcy itself.
- Can you be a company director? A bankrupt cannot be a director or manage a company without permission from the court. A business run through a company usually needs restructuring, or someone else in the director's chair.
- Can you trade under a business name? You can, but if you trade under a name that is not your full name, you must tell the people you deal with that you are bankrupt.
- Does the trustee take a share of income? If you earn over a set amount, you may need to make compulsory payments to your trustee, which a lender reading your statements will see.
- Can you keep your tools? AFSA says you can keep tools used to earn an income up to a set amount, and vehicles up to a set value. Anything above that can be sold by the trustee.
The practical result is that the bankruptcy period is for keeping the business alive, not for growing it on credit. The finance conversation starts properly at discharge.
How do lenders read bankruptcy compared with a debt agreement or liquidation?
Lenders read bankruptcy, a Part IX debt agreement, a Part X personal insolvency agreement and a company liquidation differently, because each one says something different about who failed and how the debts were dealt with. A bankruptcy and a personal insolvency agreement are about you personally. A company liquidation is about the company. And a debt agreement is read differently from bankruptcy, because you agreed to repay creditors an amount over time rather than having your estate administered by a trustee.
What lenders actually look at first is whether the event is finished and how it finished. A completed debt agreement paid as agreed reads better than one that was terminated. A company liquidation reads very differently depending on whether a director's guarantee was called and left unpaid.
| Event | Who it covers | Public record | Credit report | What a lender typically asks |
|---|---|---|---|---|
| Bankruptcy | You personally; a trustee administers your estate | Your name stays on the NPII permanently | 5 years from the date you became bankrupt, or 2 years from when it ends, whichever is later | Discharge date and paperwork, conduct of accounts since, any new defaults |
| Part IX debt agreement | You personally; an agreement with creditors to repay an agreed amount | NPII for 5 years from the date made, or the date obligations end, whichever is later | 5 years from the start date, and AFSA notes it can sometimes be longer | Whether it was completed or terminated, and the repayment record |
| Part X personal insolvency agreement | You personally; a formal arrangement administered by a trustee | Stays on the NPII permanently | Confirm with AFSA or your credit reporting body for your own file | The terms, whether it was completed, and what happened to secured assets |
| Company liquidation | The company, not you personally | Recorded on ASIC's public records, not the NPII | Generally not on your personal file unless a guarantee or personal debt defaults | Your role, whether guarantees were called, and whether any personal debt followed |
Sources: Australian Financial Security Authority, Consequences of bankruptcy, no last updated date shown. Read 10 November 2026. Australian Financial Security Authority, What happens after my agreement ends?, no last updated date shown. Read 10 November 2026.
How long do bankruptcy and debt agreements stay on the NPII and your credit report?
Bankruptcy stays on the National Personal Insolvency Index permanently and on your credit report for 5 years from the date you became bankrupt or 2 years after it ends, whichever is later, according to AFSA. A completed Part IX debt agreement stays on your credit report for 5 years from its start date, sometimes longer, and on the NPII for 5 years from the date it was made or the date your obligations end, whichever is later.
Two records, two clocks. The NPII record is public, searchable by any lender, and for bankruptcy it never comes off. The credit report entry ages off, but that does not mean the question goes away: most business finance applications still ask whether you have ever been bankrupt, and the answer has to be truthful.
Defaults, late payments and enquiries follow their own timeframes on your file. Those are covered in how a declined loan affects your credit file, and how lenders weigh old against recent marks is in what lenders look for in defaults and late payments.
What does a lender actually search?
A business lender will typically pull your personal credit file, search the NPII, and where a company is involved, check ASIC records and the PPSR for existing security. If a court judgment still shows anywhere on the file, the refinancing with a court judgment guide covers how lenders read it.
Which business finance opens up first after discharge?
The first business finance to open after discharge is usually a smaller loan secured against an asset, because the security carries the risk the credit history cannot. Small, secured and clean comes first, though the order varies by lender. Larger and unsecured facilities tend to follow once the business has a record of paying on time since discharge.
- Asset and equipment finance. A vehicle, ute or piece of equipment with a clear resale value secures the loan. Low doc asset finance is often where a discharged owner's first approval comes from. See the asset finance definition for how the structure works.
- Secured private lending. Where there is property equity, private lending against real estate can work sooner, typically at a higher cost and over a shorter term. The security does most of the work.
- Low doc business lending. A low doc loan relies on bank statements and declarations rather than full financials, which can suit a business rebuilt since discharge.
- Unsecured business loans. These usually come last, once there is a clean trading record behind the business and nothing new on the file. How unsecured lenders read a damaged file is covered in unsecured business loans with bad credit.
Reads well after discharge
- Discharge paperwork in hand and disclosed up front
- Clean business bank statements in recent months
- A deposit or trade-in toward the asset
- An asset with a clear resale value
- Tax lodgements up to date
Stalls after discharge
- Bankruptcy left off the form and found on the NPII search
- New defaults or dishonours since discharge
- Tax debt building again
- Several applications in a short window
- Starting with an unsecured request
If tax debt has started to build again, the ATO tax debt loans guide explains how lenders treat it. And because every application leaves a mark, it is worth reading how many credit enquiries is too many before you start shopping around.
How do you rebuild a borrowing record for your business after bankruptcy?
You rebuild a borrowing record after bankruptcy by giving lenders a clean, recent history to read in place of the old one, in a deliberate order. The sequence below is the timeline that usually works, though the pace varies with the business and the lender.
- Confirm discharge and keep the paperwork. Lenders will ask for proof of the date the bankruptcy ended or the debt agreement was completed.
- Check your credit file and correct errors. Debts that were covered by the bankruptcy should not still show as owing. Fix the file before the first application, not after a decline.
- Run the business through one clean account. Your bank statements become the main evidence. Avoid dishonours and overdrawn days.
- Keep tax lodged and paid. Lodgements up to date and no new ATO debt is one of the strongest signals a lender can see.
- Start small and secured. One asset finance facility, paid on time every month, builds a repayment record on your file.
- Open supplier trade accounts and pay on terms. Trade references help, particularly with specialist lenders.
- Step up once the record has history. Larger or unsecured facilities become a realistic conversation once the newer record outweighs the old one.
The rebuilder credit roadmap walks through the same idea for owners rebuilding after defaults rather than formal insolvency.
Who should you talk to before borrowing after insolvency?
Before borrowing after insolvency, talk first to the people who can tell you where you stand on the insolvency itself, then to a broker about the finance. Talk to AFSA or a financial counsellor before you borrow, particularly if you are still bankrupt or still in a debt agreement.
- AFSA. For your bankruptcy or debt agreement status, discharge dates and what you are allowed to do.
- A free financial counsellor. AFSA points people to the National Debt Helpline on 1800 007 007. For business debts, the free Small Business Debt Helpline is another option.
- A solicitor. For questions about the bankruptcy or agreement itself, or a guarantee from an earlier company.
- Your accountant. For tax, entity structure and financials that will go to a lender.
- A finance broker. Once those are settled, for which lenders will look at your file and in what order.
Be wary of anyone who promises approval because of, or despite, an insolvency record, as covered in guaranteed approval business loans with bad credit. If you have already applied somewhere and been knocked back, the business loan declined guide sets out what to do next before you apply again.
A business loan after bankruptcy or a Part IX debt agreement is a timeline, not a single decision. While bankrupt, the rules limit credit, directorships and trading names. At discharge, the clock starts: the NPII record is public, the credit report entry ages off on AFSA's published periods, and lenders weigh what has happened since. Small, secured and clean comes first, though the order varies by lender, and the bigger facilities follow the record you build.
Key takeaway: get your discharge paperwork and credit file in order, disclose the insolvency up front, and start with a small secured facility before asking for anything larger.Frequently Asked Questions
A discharged bankrupt can get a business loan, although the first approvals usually come from specialist non-bank lenders on smaller, secured facilities rather than from major banks. Lenders weigh the time since discharge, how your accounts have run since and the security offered. The bad credit business loans page explains how those lenders assess a file.
A Part IX debt agreement stays on your credit report for 5 years from the date it started, and AFSA notes it can sometimes be longer. It also stays on the National Personal Insolvency Index for 5 years from the date it was made or the date your obligations end, whichever is later. For how defaults and enquiries age on your file, see how a declined loan affects your credit file.
A bankrupt cannot be a company director or manage a company without permission from the court, according to AFSA. A bankrupt can still run a business as a sole trader, subject to restrictions and the trustee's oversight. If a guarantee from an earlier company is part of the picture, the director's guarantee guide explains how those debts can follow you.
You have to tell a lender you are bankrupt if you apply for credit over the set amount AFSA indexes and publishes while the bankruptcy is still running. After discharge, most business finance applications still ask about past bankruptcy, and the NPII record is public and permanent, so a lender's search will usually find it. Disclosing it up front with your discharge paperwork reads far better, as the rebuilder credit roadmap explains.
Equipment finance after bankruptcy is often one of the first facilities to open up, because the asset itself secures the loan. Lenders typically look for discharge, clean recent bank statements and an asset with a clear resale value, and terms vary by lender. Low doc asset finance covers how these deals are assessed for self-employed owners.
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