The short version
- Business debt consolidation means taking out one new loan to pay off several business debts. You then have one lender and one repayment.
- It helps most when you're paying several lenders every day or every week, or when you owe the ATO and the interest keeps adding up.
- It's cheaper if you can use property as security. A loan against property has a lower rate and a longer term than a loan without it.
- It won't fix a business that loses money every month. The debts will just build up again.
- Not every lender does it. Some will pay off one lender for you, but not several.
What is business debt consolidation?
Business debt consolidation is when one new loan pays off several business debts, like short-term loans, credit cards and ATO debt. You then make one repayment to one lender, usually over a longer term. The new loan can be secured on property, on vehicles and equipment, or on nothing but a director's guarantee.
Which business debts can you consolidate?
These are the business debts we see most often:
- Short-term business loans with daily or weekly repayments
- Merchant cash advances
- Business credit cards
- Overdrafts that are always at their limit
- ATO debt
- Overdue bills with suppliers
- Sometimes a vehicle or equipment loan
This guide is about business debts only. Personal debts, like your home loan or a personal credit card, come under different rules.
Why business owners do it
1. Too many repayments
This is the most common reason. One short-term loan turns into two, then three. Each one takes money out of your account every day or every week.
Say you owe $95,000 to three short-term lenders. The loans are short, so the repayments add up to about $3,600 a week.
One $95,000 loan over 3 years at 17.5% p.a. costs about $790 a week. That's about $2,800 a week you keep in the business.
But you pay for longer. That loan costs about $27,800 in interest over the 3 years. Look at the total cost, not only the weekly repayment.
2. ATO debt
When you owe the ATO, it charges interest on the unpaid amount. This is called the general interest charge. It's 11.51% a year for October to December 2026, and it's added every day. Since 1 July 2025 you can't claim it as a tax deduction.
Owe the ATO $60,000 for a year and you'll pay about $7,300 in interest. Pay the ATO with a loan and that interest stops. Whether that works out cheaper depends on the loan's rate and fees. Our guide to business loans when you owe the ATO goes through it.
3. A lower rate using property
If you or the business own property, and it's worth more than what you owe on it, you can borrow against it. That's usually much cheaper than a loan without property, and you get longer to pay it back.
Business debt consolidation loan options
Rates from the lenders we use:
| Option | Rates from about | How long | Suits |
|---|---|---|---|
| Business loan, no property needed | 13.5% p.a. (most pay 17% to 25%) | 2 to 5 years | Smaller debts, no property |
| Loan against vehicles or equipment you own | 9% p.a. | Up to 5 years | Owners who've paid down their utes or machines |
| Second mortgage or caveat loan | 15% p.a. | 1 to 2 years, some up to 5 | Bigger debts, when you need it fast |
| Non-bank first mortgage | 9.5% p.a. | Short term, or up to 5 years | Property with little or no loan on it |
| Bank loan against property | Usually the lowest | Longest | Businesses with full financials that can wait |
Business loan, no property needed
You don't need property, but a director has to sign a personal guarantee. The best businesses start at about 13.5% p.a. Most pay between 17% and 25% p.a. If your credit is poor or the business is new, it costs more. The lender works out how much you can borrow from your bank statements. See unsecured business loans.
Loan against vehicles or equipment
If your utes, trucks or machines are paid down, some lenders will lend against them to pay off other debts. Lenders call this a capital raise. One lender we use pays your other lenders directly when the loan settles. It lends up to $100,000 if you own property, or $75,000 if you don't, and wants 2 years of ABN and GST.
Second mortgage or caveat loan
A second mortgage is a loan against property that already has a home loan on it. Your bank stays first in line and the new lender sits behind it. A caveat loan is similar, but quicker to set up and usually shorter.
They're fast but usually short. One lender we use lets you put up to 75% of a second mortgage toward paying off other lenders, or 65% of a caveat loan. Some still take repayments every day or week, so check before you sign.
First mortgage
If the property has no loan on it, or only a small one, a first mortgage from a non-bank lender is cheaper than a second mortgage. The lenders we use start at about 9.5% p.a.
Bank loan
A bank loan against property usually has the lowest rate and the longest term. But banks want full financials and take longer to say yes. They also want to know why the debt built up and why it won't happen again.
What lenders want to see
- Why the debt built up. A one-off is fine, like a big job that paid late, a slow season or a tax bill. A business that keeps losing money is not.
- That you can afford the new loan. Your bank statements need to show it. One lender we use wants 3 months of money coming in above money going out before it will pay off an expensive lender.
- How many short-term loans you already have. Short-term lenders count them. One lender we use will look at up to 2. With 3 or more, it wants 3 years of trading and a good credit score. Bank loans, invoice finance and long-term, low-rate loans don't count. Nor do loans the new loan will pay off.
- Your ATO debt. If you're on a payment plan and keeping up, that helps.
- Your credit file. Defaults don't always mean no, but you'll have fewer options and pay a higher rate.
- Property. If you can offer it, you get a lower rate and longer to pay.
Read how lenders read your bank statements before you apply.
When it doesn't help
- The business is losing money. The new loan pays off the old ones, then new debts build up again. And now your property could be at risk too.
- The fees cost more than you save. Some short-term loans charge their full cost even if you pay them off early. Others give a discount. One lender we use lets you pay off just what's left of the amount you borrowed, with no more interest, once the loan is 6 months old. Get the payout figures first.
- You'd be putting your home up for business debts. If the business can't pay, you could lose the house.
- You can't pay your bills when they're due. Talk to your accountant before you take on any new debt. Directors have legal duties here.
How to consolidate business debt
1. Write down every debt: who it's with, how much you owe, the repayment, how often you pay, the rate and when it ends. 2. Ask each lender for a payout figure in writing. That's the full amount to close the loan. 3. We take it all to the lenders that do consolidation and compare the total cost. 4. When the new loan settles, the new lender pays off your old lenders. 5. Check each old lender has closed the loan and stopped taking repayments.
What to send us
- Your list of debts and the payout figures
- 6 months of business bank statements
- Your ATO statement, and your payment plan if you have one
- Recent financials for bigger loans
- Property details, if you can offer property
Talk to us
Send us your list of debts. We'll show you what one loan would cost compared with what you pay now, across the 130+ lenders we work with. If it won't leave you better off, we'll tell you. See our business loans page, or start with the application form.
We're a broker, not a lender. All finance is subject to lender approval. This page is general information, not personal financial, credit or tax advice. Finance for a business purpose generally sits outside the consumer credit rules in the NCCP.
Credit Representative 560751 of Viking Money Pty Ltd, Australian Credit Licence 471435 (Viking Aggregation Pty Ltd).
Sources
- Business loan, caveat and mortgage rates and rules from lenders Aurelius Capital works with (lenders not named)
- General interest charge (GIC) rates (Australian Taxation Office)