Can I Get Business Finance If I Have IRD Debt?
One of the most common questions I get is if a business owner can still get a business loan with IRD debt.
The short answer is yes. Many business owners assume that because they have GST arrears, PAYE arrears, or an outstanding tax bill, they have no funding options available. While traditional banks can be cautious when tax debt exists, alternative funding providers like ourselves often assess businesses differently.
Over the years, I've worked with a number of New Zealand businesses that have had IRD debt. In many cases, these businesses were still strong, still growing, and still servicing their customers well. The challenge wasn't necessarily the business itself it was cash flow restricting tax repayments.
Why Businesses End Up Owing IRD
Most business owners don't set out to fall behind on their tax obligations. Alot are still holding the aftershocks of Covids slowdown and haven’t had a chance to clear these off. Other reasons include:
Rapid business growth - where the business has reused their allocated tax for cashflow
Slow-paying customers
Investment into staff, stock, or equipment
In lots of situations, the business is actually performing well. The issue is that cash has been tied up elsewhere in their business and it would strain them significantly if they were to use it.
How We Assess Businesses Differently
Traditional lenders often focus heavily on historical financial performance and balance sheet strength. At Pacific Invoice Finance, we take a different approach. Rather than focusing solely on what happened six or twelve months ago, we spend time understanding:
Who your customers currently are
The quality of your accounts receivable
Existing contracts and future revenue
Cash flow coming into the business
The plan moving forward
A business that has temporary tax arrears can still be a strong business. We just need to understand the plan you have to move forward.
What If I Have GST Or PAYE Arrears?
This is something we see regularly. Having GST arrears or PAYE arrears does not automatically mean funding isn't available.
The key question is, is there a plan in place?
If you’ve already entered into an arrangement with IRD even better because that shows you’re proactive, open and working towards getting the business back on track.
Every situation is unique, but an existing repayment arrangement can demonstrate that the issue is being managed responsibly.
What We Like To See
When reviewing funding opportunities, we're typically looking for:
A viable trading business
Good quality customers
Ongoing revenue
Visibility of future work
A clear plan to manage existing tax arrears
If those factors exist, funding will potentially be possible even where tax debt is present.
The Reality
Many successful businesses have experienced cash flow pressure at some point. Having an outstanding tax liability doesn't define the strength of your business.
In fact, some of the strongest businesses I've worked with have faced temporary challenges with GST, PAYE, or tax arrears while continuing to grow and serve their customers. The important thing is understanding your options early and putting a plan in place before the situation becomes more difficult.
If You Want to Talk It Through
If you want a quick idea of what this could look like for your business, I’m happy to run through it with you.
Or learn more: