Can I borrow to pay my BAS?

Why does BAS catch so many businesses out?

Because most of the money on a BAS was never really yours. Once your GST turnover reaches $75,000, you must be registered for GST, and from then on the GST you collect from customers belongs to the ATO. So does the PAYG you withhold from wages. But it sits in your account for weeks or months, mixed in with everything else, and it’s very easy to spend.

Then the quarter ends, the bill arrives, and the cash has gone into stock, wages and suppliers. Mr’s polite way of putting it: the BAS bill isn’t a surprise expense; it’s a bill for money you’ve already spent.

When does borrowing to pay BAS make sense?

Borrowing works well when the shortfall is temporary and there’s an obvious repayment source:

• a large customer owes you and pays in 30–60 days;
• a big quarter — strong sales mean a big GST bill, but the cash is tied up in debtors;
• a seasonal business paying a BAS from its quiet period;
• one-off costs (equipment, a fit-out) drained the account this quarter;
• you want to clear the BAS cleanly rather than enter a longer ATO arrangement.

In each case, the loan bridges a timing gap and normal trading repays it.

When is borrowing the wrong answer?

When the BAS is a symptom. If the business can’t pay this quarter’s BAS and next quarter looks the same, the problem is margins, pricing, costs or a customer who never pays — not timing. A loan would add a repayment on top of the next BAS. In that case, talk to your accountant first, and consider the free Small Business Debt Helpline (1800 413 828).

Which kind of loan suits a BAS bill?

Option	Suits	Watch for
Unsecured term loan (typically $5k–$500k)	One-off BAS shortfall, steady trading	Repayments must fit alongside the next BAS
Line of credit	Recurring timing gaps that clear between quarters	A balance that never comes down
Property-secured loan ($20k–$5m)	Larger BAS or several quarters of debt	Property on the line; keep the term sensible
ATO payment plan	Manageable debt you’d rather not borrow for	GIC keeps running and isn’t deductible from 1 July 2025

If you’re weighing the last row against the others, read ATO payment plan or business loan.

What will a lender want to see?

• Your BAS lodged — the lender needs to know the real amount.
• Recent bank statements showing where the cash went and how it comes back.
• Your ATO statement of account if there’s any older debt.
• The repayment source: aged debtors list, contracts, seasonal history.

An illustrative example. An Adelaide catering company has a $48k BAS due after a huge spring quarter. $70k is owed by three corporate clients on 45-day terms. A short unsecured loan pays the BAS on the due date; the client payments repay it. The business avoids ATO interest and keeps a clean lodgement and payment record — something lenders notice next time.

How do I stop next quarter repeating this?

Mr’s three habits:

1. Separate tax money. Open a second account. Each week, move the GST and PAYG portion of what came in. Don’t touch it.
2. Forecast the BAS monthly, not quarterly — your accounting software can show the running figure.
3. Chase debtors early. business.gov.au’s advice on improving cash flow starts with sending invoices earlier and following up overdue accounts promptly. See what to do when customers pay late.

And from 1 July 2026, super runs on a different clock too — paid each payday rather than quarterly. Our guide to payday super and cash flow explains how to plan for it.

What happens if I lodge but don’t pay?

The amount becomes a debt to the ATO, and general interest charge starts accruing on it, compounding daily. Since 1 July 2025, that interest isn’t deductible. You’ll start receiving reminders, and if nothing happens, the ATO can escalate. But you’ll avoid the separate problem of failing to lodge, and you’ll keep options open: the ATO says businesses owing $200,000 or less may be able to set up a payment plan online.

What you shouldn’t do is not lodge because you can’t pay. That’s the combination that hurts most — with the ATO and with lenders.

Is there a smarter way to handle GST?

A few owners ask about their GST accounting method or reporting cycle. Some small businesses can account for GST on a cash basis, which means GST is payable when customers actually pay rather than when you invoice. Some can choose monthly or quarterly reporting, or pay instalments. Each option has eligibility rules and trade-offs, so it’s a conversation for your accountant — but for a business whose customers pay slowly, the GST timing question is worth asking before reaching for a loan.

How quickly can a BAS loan be arranged?

That depends on the lender and how ready your documents are. With lodged BAS, recent statements and a clear repayment source, unsecured options tend to be the quickest. Enquire as soon as you know the bill will be a stretch, not on the due date.

BAS due and cash short?

Ask Mr in about 60 seconds — tell us the BAS amount, the due date and what money is coming in. There’s no credit check to enquire, your details aren’t broadcast to a list of lenders, and a real person will tell you whether a loan, a line of credit or an ATO plan makes most sense. Honest answers about your ATO position help us find the right lender first go. See if you qualify.