Part 9 loans for self-employed and sole traders
8 min read
Self-employment and debt agreements overlap more than most people realise, and for a structural reason: as a sole trader there is no line between you and the business, so a business that struggles becomes a personal insolvency. That same structure shapes what finance is available to you afterwards, and it also creates the one issue that catches sole traders out more than any other.
What your stress is saying
“I took a punt on myself, it didn't work, and now it's on my permanent record.”
What's actually true
Specialist lenders in this space see this constantly.
What your stress is saying
“My accountant made my income look tiny and now it's working against me.”
What's actually true
Add-backs exist precisely to fix that, and they're standard practice.
The structure issue: why your business debts ended up in your agreement
A sole trader is not a separate legal entity. You and the business are the same person in law, which means supplier accounts, business credit cards, trade credit and equipment finance shortfalls are your personal debts. A Part IX debt agreement covers unsecured personal debts, so those business debts can sit inside it alongside anything domestic.
Two consequences follow, and both matter more than people expect. First, your suppliers are creditors in your agreement, which is often awkward, because they are also the businesses you need for the next job. Trade accounts being closed or shifted to cash terms is a normal downstream effect rather than anything personal.
Second, the property limits in a debt agreement apply to everything you own, including work assets. Where tools, equipment or vehicles are a significant part of your position, that is a question for your administrator. It is squarely outside what a broker can advise on.
Full-doc, low-doc, and what each actually needs
The default expectation for self-employed applicants is two years of tax returns with matching notices of assessment. If you have those and they show reasonable income, you are in the strongest position available and full-doc lenders are open to you.
If you do not, because returns are outstanding, or because the business is younger than two years, low-doc assessment is the alternative. Requirements vary, but the pattern is consistent:
- ABN active for at least 12 months, with 24 preferred by most lenders.
- GST registration held for 12 months or more, where your turnover requires it.
- Six to twelve months of business bank statements showing consistent trading income.
- Recent BAS lodgements as an alternative to, or alongside, bank statements.
- An accountant's declaration on letterhead confirming your income and that returns are current or in progress.
- No unmanaged ATO debt, see below, because this is the one that most often stops an otherwise workable application.
ATO debt: the issue that sits in front of everything else
Unpaid tax is extremely common among sole traders who have been through financial difficulty, and it needs handling directly rather than hoped past. Lenders take it seriously for a straightforward reason: the ATO has recovery powers that most creditors do not, and an unmanaged tax debt is a genuine risk to your ability to keep trading.
The distinction that matters is between an unmanaged debt and a formal payment arrangement being met. A debt sitting there accruing interest with no arrangement is close to a hard stop with most lenders. The same debt under an ATO payment plan that you have been meeting for several months is usually workable. It becomes a known, budgeted commitment rather than an open risk.
It is also worth understanding that tax debts incurred before your agreement may be covered by it, while tax obligations arising after it are not. If you are unsure which is which, that is a question for your administrator or your accountant, and worth resolving before you apply for anything.
Add-backs, and how to ask for them
Your accountant's job is to minimise taxable income; a lender's job is to establish what you can afford. Add-backs bridge the two by adding back deductions that reduced your tax without reducing the cash available to you.
The commonly accepted ones are depreciation, one-off or non-recurring expenses, interest on any debt being refinanced by the new loan, superannuation contributions above the compulsory rate, and in some cases a portion of motor vehicle expenses where the vehicle being financed replaces one already expensed.
For anyone with significant equipment or vehicles, depreciation alone can shift the assessed income materially. Ask for add-backs explicitly, and if you can, get your accountant to set them out in a short letter. It converts an argument into a document, and documents are what get assessed.
Consumer loan or business finance?
If the vehicle is predominantly for business use, a chattel mortgage may be available instead of a consumer car loan, with different treatment of GST and depreciation and a different lender panel behind it. If it is predominantly personal, it is a consumer loan and sits under the responsible lending obligations that apply to household credit.
Which structure suits you is a question for your accountant rather than a broker or a web page, because it turns on your tax position rather than on the credit assessment. The reason it is worth raising early is that the two paths have different lender panels, a decline on one is not a decline on the other, and being told 'no' without being told which panel was tried is not a useful answer.
The rule most people find out too late
Above $7,457, you must tell the lender you're in a debt agreement
Under section 269 of the Bankruptcy Act 1966, while you are in a debt agreement you must disclose that fact before obtaining credit above $7,457. This is not a lender policy or a preference. Failing to do it is a criminal offence and serious penalties apply.
In practice it is paperwork rather than an obstacle. A lender who writes in this space expects it and it does not, by itself, cause a decline. The risk is not the disclosure. It is going to a lender who never asks, never records it, and leaves you exposed. We raise it as a matter of course.
Figures current at 17 August 2026. AFSA reindexes 20 March and 20 September. Source: AFSA indexed amounts.
During, just after, or well after: three different answers
Where you sit relative to your agreement changes the lender panel more than anything else about you. Whatever your occupation, this is the shape of it:
- Still in the agreementThe smallest panel. A handful of specialist lenders write here, and they want agreement payments up to date, no new defaults since it started, and stable income. The s269 disclosure applies above $7,457.
- Recently completedA noticeably wider panel, and the moment most worth checking. It is common for someone declined a year earlier to be approved shortly after completion with nothing else in their life having changed. Make sure the completion is formally recorded before applying.
- Completed more than 12 months agoWider again, with better pricing available. The agreement may still appear on your credit file. AFSA's guidance is up to five years, and longer in some cases. A year of clean conduct behind you changes how it is read.
What this site does, and what nobody here can do
This site can
- Explain how lenders read a debt agreement
- Pass your enquiry to Simple Loans, who arrange the finance
- Tell you plainly when the answer is “not yet”
Nobody here can
- Provide credit, or credit assistance, from this website
- Advise you to enter, change or end an agreement
- Negotiate with your creditors or administrator
- Remove or dispute anything on your credit file
This website provides information only. Advising on an agreement, negotiating with creditors and fixing credit files are debt management services, which require a credit licence authorisation Simple Loans does not hold. For help with the agreement itself, speak to your registered administrator, or the National Debt Helpline on 1800 007 007 which is free, independent, and not selling anything. There is also a plain-English explainer here.
Worth thinking about before you call anyone
Is the business still trading, and how does turnover compare to before the agreement?
How current are your tax returns and BAS, and is there an ATO balance outstanding?
If there is, the key question is whether there's a payment plan in place. That changes the answer more than the amount does.
What work are you unable to take on because of the vehicle situation?
Has anyone ever talked to you about add-backs on your taxable income?
If not, it's worth a call to your accountant before any application. It's often the largest single lever available.
No one is going to ask you these on a call to catch you out. They're here because the answers are yours, and they're the same ones a broker needs before they can tell you anything useful.
Self-employed & sole traders: common questions
Can a sole trader get finance during a Part 9 debt agreement?
It is possible through specialist lenders, particularly for a secured vehicle used to generate income. They will generally want the business trading, agreement payments up to date, no new defaults since it started, and either tax returns or a low-doc alternative. An unmanaged ATO debt is usually the blocking issue rather than the agreement itself. Options widen substantially once the agreement completes.
I haven't done my tax returns. What are my options?
Low-doc assessment is built for this. Depending on the lender, six to twelve months of business bank statements, recent BAS lodgements, or an accountant's declaration can stand in for returns. Most lenders want the ABN held for at least twelve months and GST registration for a similar period. Lodging outstanding returns widens your options considerably and is worth doing regardless of whether you proceed with a loan.
Does an ATO debt stop me getting approved?
An unmanaged one usually does, because the ATO has recovery powers that threaten your ability to keep trading. The same debt under a formal payment arrangement that you have been meeting for several months is generally workable. It becomes a known commitment rather than an open risk. If you have tax debt and no arrangement, sorting that out first is the highest-value thing you can do.
Are my business debts covered by my debt agreement?
If you trade as a sole trader, generally yes. You and the business are the same legal person, so unsecured business debts are personal debts and can be covered by a Part IX agreement. If you trade through a company the position differs. Which of your debts are covered, and how tax obligations before and after the agreement are treated, are questions for your debt agreement administrator or accountant rather than a broker.
Find out where you actually stand
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