How your Tax Strategies can affect your Business Loan

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Traditionally banks have been wary of lending to small business and the capacity to borrow is becoming more difficult. Because of this, banks have spent most of their focus on bigger fish, leaving entrepreneurs and startups to generally fend for themselves. However, Australia is built on small businesses, so it is in all of our best interest to make sure that these businesses get the help they need to become successful.


When it comes to growing your business, there will come a time to get a business loan to continue to fund the business working capital and to grow.

When you do, you need to make sure that you have all of your ducks in a row. One area is tax, you need to make sure that you have a good tax compliance history as the bank’s do consider debts owing to the ATO and will question or even hold back a loan if your lodgements are not up to date. Ensuring that you have current financial statements, prepared by your accountant is essential for borrowing.

If you have had a tax year where profit was low you may want to capitalise on this and show a loss on your tax return. But remember, that while this may help you with your tax liabilities, it will hurt you when applying for a loan. Consider seeking the advice of your accountant on how to position this with the bank.  

Also it is important for your tax reporting that as the complexity of your business grows and you are gaining finance you may need to implement a greater level of reporting and governance. As a minimum you may need to be keep books up to date monthly or quarterly just for reporting on bank covenant requirements. There are many management reporting tools and systems that can help reduce the time for you in preparing covenant reports for the bank.

Are you unsure what to do? 

A qualified tax professional can help you to claim the right deductions and ensure your finances are properly recorded and represented for a bank when applying for a loan. 

We are experts in helping our clients with relationship management with Bank Managers and Lenders, with relationships across all major banks we are only too happy to help you navigate this relationship. Speak to our team if you need assistance.


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About Author

Azure Group
Azure Group

Azure Group is the leading Chartered Accounting, Business Advisory and Strategic Advisory firm supporting the growth & success of fast growing entrepreneurial businesses.

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