When your business is facing mounting ATO debt, cash flow pressure, or financial uncertainty, two common options often come up: refinancing or a Small Business Restructure (SBR). Each has its own advantages and drawbacks, and choosing the right path can make a major difference to your long-term business survival and financial health.

What Is Refinancing?

Refinancing involves taking out a new business loan to pay off existing debt — including tax obligations. This can consolidate multiple debts, lower your monthly repayments, or spread payments over a longer period.

Pros of Refinancing:

Immediate cash injection to pay off ATO debts or suppliers.
Preserves control: You maintain full control over the business — no external practitioner needed.
Loan interest is tax-deductible, unlike ATO General Interest Charges (GIC).

Cons of Refinancing:

Requires good credit history or assets as security.
Can lead to over-leverage (taking on more debt than manageable).
Only postpones the core problem if deeper financial issues exist.

What Is a Small Business Restructure (SBR)?

A Small Business Restructure is a formal process under Australia’s insolvency laws that allows a financially distressed business to legally reduce or compromise its tax and trade debts — without handing over control of the business.

This government-supported option is managed by a registered restructuring practitioner and requires the business to meet certain eligibility criteria.

Pros of SBR:

Legally reduce tax debts (in many cases by up to 70%).
No need to wind up the company — business continues trading.
No personal liability for directors if done properly.
Gives a clear legal framework with creditor approval.

Cons of SBR:

One-time opportunity every 7 years (unless exceptions apply).
Not available to all businesses — must have < $1 million in liabilities and up-to-date ATO lodgements.
Requires engaging a licensed restructuring practitioner, which involves professional fees.

Refinancing vs. SBR: When to Use Each?

So, Which Is Right for You?

Choose Refinancing if:
- You want to preserve credit rating
- You have a plan for repayment and are simply short on liquidity
- You want to avoid formal processes or insolvency frameworks
Choose Small Business Restructure (SBR) if:
- You owe over $80,000+ in ATO or trade debt
- You’re struggling to keep up with PAYG, GST, or Super
- You want a legal and sustainable path to survive and recover
- You can’t get approved for new loans

Final Thoughts

Refinancing can buy you time — but if your debt is already unmanageable, it may just delay the inevitable. SBR offers a structured way to reduce debt and save your business, especially if you’re under ATO pressure or receiving DPNs.

Speak to a qualified restructuring adviser or insolvency practitioner to understand which path suits your business best — the right decision can be the difference between recovery and closure.

References:

Australian Securities & Investments Commission (ASIC) – Small Business Restructuring
Australian Taxation Office (ATO) – GIC & Penalty Interest
The Treasury – Insolvency Reforms for Small Business
Australian Financial Security Authority – Restructuring Practitioner Overview

Can My Accountant Act as My SBR Practitioner?

Only if they are a registered liquidator and formally licensed as a Small Business Restructuring Practitioner. Most standard accountants are not qualified to take on this legal role. However, they can still work closely with the SBRP throughout the process to ensure the business remains compliant and the restructure aligns with your financial goals.

Why Engage an SBRP Even If You Have an Accountant

Even the most capable accountant might not be trained in restructuring law or debt negotiations with the ATO. Here’s why a qualified SBRP is essential:

Legal authority to implement the restructure
ATO-backed process with creditor protection
Ability to reduce unsecured debts (including ATO) by up to 70%
Protects directors from further liability, including potential DPNs (Director Penalty Notices)

Conclusion: A Collaborative Approach

Having an accountant is not a barrier to SBR—in fact, it can be a great advantage. Your accountant and a licensed SBRP can work together to create a successful plan, giving your business the best chance of survival and long-term recovery.

If your business owes over $80,000 to the ATO or is struggling with cash flow, it might be time to consider the SBR pathway—with the help of your accountant and a qualified restructuring practitioner.

References

ASIC. (2024). Restructuring and the restructuring plan. Retrieved from: https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors/restructuring-and-the-restructuring-plan/
Australian Restructuring Insolvency and Turnaround Association (ARITA). (2024). Small Business Restructuring. Retrieved from: https://arita.com.au
Corporations Act 2001 (Cth), Part 5.3B

Refinancing vs. Small Business Restructure (SBR): Which Is Right for Your Business?