Why Australian Businesses Still Get Told No for Finance

What I've Noticed About Who Actually Gets Funded

Two conversations have stuck with me in the last month, for different reasons.

The first was with a business owner who'd fallen behind on his BAS payments during a rough stretch. Nothing reckless, just a business that had a bad run and tax arrears that built up while he kept the wages paid and the doors open. He asked me directly: can I get funding if I've got tax arrears, or a year where we barely broke even? He'd already been told no twice.

The second was a business that manufactures precision components for companies working on Defence contracts. Strong revenue, reliable customers, a well-run operation by any measure. And still, lender after lender hesitated, not because of the numbers, but because of what they manufactured and the supply chain they operated in.

Different problems on the surface. The same thing underneath, once you notice it. Plenty of good businesses are being judged by the shape of their file rather than the substance of what's actually going on inside it.

Tax Arrears Isn't the Automatic No Most People Assume

A tax debt on the books doesn't disqualify a business from finance, though most owners assume it does, usually because a bank has already told them so. What matters to a lender willing to look properly is how the arrears came about, whether trading has stabilised since, and whether there's a plan in place, an ATO arrangement, a clear cash flow trend and evidence the business isn't sliding further behind.

It's also worth understanding what carrying that debt is now costing. The ATO's general interest charge (GIC) currently sits at 11.17% (@2026), compounds daily, and as of 1 July 2025 is no longer tax deductible, regardless of which year the debt relates to. That's a more expensive way to owe money than it was two years ago. It's one of the reasons I'll often walk a client through what a properly structured business finance facility looks like alongside an ATO debt, not instead of dealing with it, but as part of dealing with it sensibly. Plus show them options where the interest charges are deductible.

A Break-Even Year Isn't the Same as a Failing Business

I recently worked with a manufacturing business that had one break-even year on their financials, the result of a large bad debt after a customer went into administration. Everything before and after that year showed a business trading soundly. Two lenders looked at the single flat year and said no. A third looked at the trend either side of it, understood what had actually happened, and approved a working capital facility that let the business rebuild stock levels without waiting another twelve months for the numbers to look tidy again.

A single bad year tells you something happened. It doesn't tell you who the business is. An experienced finance brokers asks what happened and why it happened, not just what the number was.

When the Problem Isn't the Numbers, It's the Industry

The Defence supplier I mentioned earlier had none of these issues. Solid financials, established contracts, a genuinely well-managed business. What it had instead was an industry classification that made several lenders nervous, more compliance overhead than they wanted to deal with, more questions than they wanted to answer, so the easier path for them was simply to decline.

That's not a judgment on the business. It's a judgment on the lender's appetite for extra paperwork and really understanding where Australia is progressing in terms of our Defence capabilities. I know which lenders in my network understand Defence supply chains and are comfortable funding them properly. This allows Defence suppliers to obtain working capital facilities that let them fulfil new and existing contracts without draining its own reserves to do it.

What This Actually Comes Down To

Every client who's been told no has usually been told no by one lender, sometimes two, and has taken that as the final answer. It rarely is. There's a wide range of lenders in the market, each with a different appetite for arrears, industry, or a rough year on paper, and no single one of them speaks for all the others.

Meeting a client where they are, rather than where a rejection letter says they should be, matters more than people expect from a finance broker. Most of the business owners I sit across from aren't looking for a favour. They're looking for someone to genuinely understand their business (in detail), what happened and find the lender who'll look past the one detail that's been getting in the way.

I've sat across the desk from enough clients bracing for another no to know what relief looks like when the answer turns out to be yes, and how much of that comes down to someone taking the time to ask questions about their business, their journey and what they need, rather than reading a number off a page and stopping there.

There's No Shame in Any of This

Neither of these clients needed sympathy. They needed someone to stop treating a tax debt or an industry code as the whole story. The business owner with arrears wasn't reckless, he was keeping people employed through a hard year and the ATO bill was the thing that gave. The manufacturer's break-even year wasn't mismanagement; it was a bad debt landing at the worst possible time. And the Defence supplier hadn't done anything wrong at all; it was simply operating in a sector some lenders find easier to avoid than understand.

None of that is a character flaw. It's just business. After thirty years in commercial finance, I’ve learned that the numbers rarely tell the whole story. You need to understand the client, listen, and I mean really listen, ask what happened, and understand the circumstances before forming a view. That’s the level of care and understanding I believe every business owner should expect from someone helping them secure finance.

If you’ve been told no because of tax arrears, a difficult year in your financials, or because your industry falls outside a lender’s appetite, don’t assume that decision is the final word. A different lender may take a very different view once they understand the full story behind the numbers.

At Pfitz Financial, we help Australian businesses secure the right finance solution with the right lender.

We take the time to understand your business, its financial position, your objectives and working alongside you to identify funding solutions that support both your immediate needs and longer-term goals.

For more information on working capital solutions, business loans, short term loans or asset finance, visit our https://www.pfbs.com.au/questionsandanswers page.