Quick answer
Bad credit does not automatically stop a tradie getting business finance. Lenders working with this market look at your recent bank statements, how long you have traded, the reason for the mark on your file and what security you can offer. Approval is never guaranteed, but a past default, ATO debt or late payments are assessed case by case, and your first enquiry involves no credit check.
Key points
- A mark on your file is one input, not the whole decision
- Recent business bank statements often carry more weight than an old default
- Property can open up larger amounts, but it is not required for smaller ones
- Be upfront on the form so the right option is matched first time
- No credit check when you first enquire, and no guarantees either way
- Unsecured range
- Typically $5k to $500k, sized on turnover and bank statements
- Property-secured range
- $20k to $5m, including first and second mortgages and caveats
- First step
- A 60-second enquiry with no credit check
Plenty of good tradies have a blemish somewhere. A client who never paid and sent you into arrears with your own supplier. A BAS you could not cover in a wet quarter. A personal credit card that got away from you when a job fell over. None of that changes your licence, your skills or the work in your diary.
This hub explains how bad credit is actually treated when a tradie asks for business finance, and points you to the page that fits your trade or your situation.
What counts as bad credit for a tradie?
Usually it means one or more of these showing up when a lender looks at you:
- A default listed on your credit file after a bill went unpaid for long enough
- A court judgment against you
- A history of late or missed repayments
- Past bankruptcy, a debt agreement or a business insolvency
- An overdue tax debt with the ATO
- A thin file with very little borrowing history at all
Notice that the last one is not really “bad”, just short. Lenders can read a young business and a short file differently from a damaged one, and the options for each are not the same.
How long do the marks stay on file?
The Office of the Australian Information Commissioner publishes how long different items are kept on a credit report. The main ones are below.
| Item on your file | How long it is kept |
|---|---|
| Default | 5 years |
| Court judgment | 5 years |
| Repayment history | 2 years |
| Financial hardship information | 1 year |
| Bankruptcy | The later of 5 years from the day you became bankrupt, or 2 years after it ended |
| Serious credit infringement | 7 years |
Those clocks run whether or not you have paid the debt since. Paying off an old default is still worth doing, because it shows in your story and it can be the difference in a conversation, but it does not rub the listing out early. Read more in defaults and tradies.
How do lenders weigh bad credit against your business?
A person assessing a tradie with a rough file usually asks a short list of questions:
- What happened, and when? A default from four years ago in a different life is not the same as one last month.
- Is the business trading well now? Steady deposits into the business account tell a more current story than a listing.
- What is the money for, and how will it be repaid? A clear job, invoice or contract makes a request easier to understand.
- Is there security? Owning property can widen the choices considerably.
- Is anything still unresolved, such as an unpaid tax debt with no plan?
For self-employed people that last question matters a lot, which is why how lenders view self-employed tradies is worth a read before you apply.
Which bad credit page should you read?
Start with the one that matches your trade, since lenders think about a plumber’s cash cycle differently from a concreter’s.
- By trade: tradies in general, builders, plumbers, electricians, carpenters, concreters, painters, landscapers, roofers and mechanics
- By situation: defaults, no credit check myths, after bankruptcy or insolvency, past tax debt, low doc
Where could you start?
If you already know what you are after, the apply page takes a few minutes: your business, the amount, and whether you own property. That is enough for a person to start working out what might fit.
An illustrative example
Here is a hypothetical to show the working. No real business is described.
A sole trader who does fit-outs has traded for five years. Two years ago a client went under owing a large invoice, and a supplier account went unpaid long enough to be listed as a default. Since then the business account has shown steady deposits every month, and the default has been paid. A new contract needs materials bought up front.
On paper the default looks bad. In the bank statements the business looks healthy. A lender who reads both would likely want to talk about the contract, the deposits and what changed. That conversation is possible. It is not guaranteed to end in a yes, but it starts from a better place than a flat “no” from a system that only reads the file.
What can you do before you apply?
- Pull your own credit reports, which individuals can ask for free from each credit reporting body, and check every listing is correct
- Fix anything that is wrong. A mistaken default is worth disputing before you borrow
- Get your BAS lodged, even if you cannot pay it all yet
- Keep personal spending out of the business account where you can, so the statements tell a clean story
- Write down what happened in two or three plain sentences, because you will be asked
Our loan readiness checklist turns that into a tick-list of documents.
What should you not do?
Do not fire off applications to every lender you can find. Each formal application can leave an enquiry on your file, and a string of them can read as desperation. Be wary of anyone who promises approval before they have seen anything or asks for a fee up front to “fix” your credit. If you owe the ATO, talking to them early is usually better than waiting for it to escalate, and the ATO debt page walks through the choices.
If you are really struggling, the Small Business Debt Helpline offers free, independent financial counselling for business owners.
What happens when you reach out?
Nothing touches your credit file at the first step. Your details stay with the people handling your case instead of being passed round a long list of lenders, and a human reads every enquiry. In return, give straight answers on the form, awkward bits included, so the match is right from the start. Start your enquiry when it suits.
Frequently asked questions
Can a tradie with bad credit get a business loan in Australia?
Sometimes, yes. Options exist for business owners with defaults, late payments or ATO arrears, and they are assessed case by case. What you can get depends on your trading history, your bank statements, the size of the request and whether you can offer property as security. Nobody can promise approval before they have seen your situation.
Will enquiring hurt my credit score?
Not at the first step here. Your first enquiry does not involve a credit check. If a lender later needs one to assess a formal application, you should be told before it happens, and you can ask what it involves.
How long do defaults stay on a credit file?
The Office of the Australian Information Commissioner lists five years for a default and five years for a court judgment, with bankruptcy held for the later of five years from the date or two years after it ends. Repayment history is kept for two years.
Do I need property to borrow with bad credit?
No. Unsecured options exist for trading businesses with steady deposits. Property security tends to make larger amounts possible and can widen the choices, which is why one of the first questions on the form is whether you own real estate.
Should I wait until my credit improves before I apply?
Not necessarily. If the money would fix a cash flow problem that is making things worse, waiting can cost more than acting. If you are not in a hurry, tidying a few things first can improve the options in front of you.
Short on time? Enquire right here
About 60 seconds. No credit check when you first enquire, and a real person calls you back.