How Can Private Lending Help Brookvale Businesses Facing ATO Tax Debt?

In the current economic climate, cash flow disruptions are a common headache for small to medium businesses. For some, they result from delayed client payments. For others, they result from a sharp spike in overheads or unexpected obligations like a tax bill.

One growing trend across Australia is the rising number of businesses receiving urgent notices from the Australian Taxation Office (ATO). In 2023, the ATO recommenced aggressive debt recovery action after a leniency period during the pandemic. That shift has left many business owners scrambling for Funding, particularly in areas like Brookvale, New South Wales — a bustling commercial precinct on Sydney's Northern Beaches.

This blog explores how Innovate Funding helped a Brookvale-based pub secure $150,000 as a second mortgage at a 55% Loan-to-Value Ratio (LVR) to repay urgent ATO debt. We'll look at how private lender Innovate Funding helped, the mechanics of the loan, and why more Brookvale businesses are turning to non-bank finance to stay afloat.

The Brookvale Backdrop: A Booming Suburb with Unique Business Challenges

Brookvale is a suburb undergoing rapid transformation. Known for its mix of industrial properties, local hospitality businesses, and proximity to major Northern Beaches thoroughfares, the suburb has become a hotspot for growing enterprises. With growth comes complexity.

Brookvale's commercial property landscape includes older warehouses, mixed-use properties, and newer strata units. While offering great business opportunities, these characteristics often don't fit into the rigid lending criteria of traditional banks. Challenges for business owners in Brookvale include:

• Commercial properties that don't meet standard valuation profiles

• Hospitality and trade businesses with fluctuating income patterns

• Tight timelines that don't allow for lengthy bank approvals

• Complex ownership structures that slow down the funding process

These are the exact scenarios where private lending becomes a powerful tool.

The Problem: ATO Debt Threatened Business Continuity

The client in this scenario was a long-standing operator of a licensed venue in Brookvale. The business had recently invested heavily in a refurbishment, aiming to capitalise on a busy season ahead. However, just weeks after reopening, they received a notice from the ATO outlining a significant overdue tax debt — with immediate action required.

The business was profitable but did not have immediate liquidity to satisfy the tax debt. Their bank, already at capacity with existing facilities, could not offer short-term assistance fast enough. They needed Funding within days, not weeks.

This situation is more common than many realise. Thousands of Australian businesses are currently carrying overdue tax liabilities. Once the ATO begins issuing garnishee notices or initiating legal recovery action, the window for response is extremely narrow.

The Solution: $150,000 Second Mortgage at 55% LVR

The client recognised the situation's urgency and approached Innovate Funding for a fast and flexible solution. After assessing the client's available property equity, a second mortgage was arranged within 48 hours. The key facts of the deal included:

• Loan Amount: $150,000

• Loan Type: Second Mortgage

• Location: Brookvale, NSW

• Loan-to-Value Ratio (LVR): 55%

• Rate: 1.25% p/m

• Use of Funds: Immediate repayment of ATO tax debt

• Turnaround Time: Pre-approval within 24 hours, settlement within 48 hours

Innovate Funding secured the second mortgage against the client's commercial property, which already had a first mortgage with a mainstream lender. Approval was fast and uncomplicated because the total LVR was conservative, and the property had sufficient equity.

What is a Second Mortgage?

A second mortgage is a secured loan placed behind an existing mortgage on the same property. Unlike refinancing, which typically replaces the entire mortgage, a second mortgage sits alongside the first loan without disrupting existing terms.

Private second mortgages are often short-term in nature and are useful in scenarios like:

• Urgent tax payments

• Business expansion

• Bridging finance

• Resolving short-term cash flow gaps

• Settling disputes or creditor claims

One of the main advantages of private second mortgages is speed. Because these loans are asset-based, approvals are based primarily on the property's value, not the borrower's credit profile or trading history.

Why Private Lending Was the Right Fit for This Client

In this case, the business had already maxed out its borrowing capacity with its existing bank. A traditional lender would have required updated financials, trading history, and significant time to assess the loan. For this pub operator, time was a luxury they did not have. Private lending offered a pathway that was:

• Quick: The entire process took less than three days

• Flexible: No need to refinance or break current banking relationships

• Tailored: The loan was structured to match the client's short-term needs

• Confidential: No disruption to the business's day-to-day operations

Most importantly, it protected the business from further ATO penalties and preserved its working capital for core operations.

The Bigger Picture: Why Brookvale Businesses Are Using Private Lending

The Brookvale business community is diverse — ranging from small industrial operators and mechanics to creative studios and licensed venues. What many of these businesses have in common is that they are asset-rich but often cash-flow tight.

Traditional lenders, especially the big banks, are increasingly cautious in this environment. They often require lengthy financial audits, rigid documentation, and long approval timelines.

Private lending fills the gap by offering funding solutions such as:

• First and second mortgages

• Bridging loans

• Business purpose loans secured by property

These loans are typically used for 3–12 months and give business owners the breathing room to manage immediate pressures while planning their next move.

When Should a Business Owner Consider a Private Loan?

Private lending isn't for every situation. Interest rates are higher than standard bank finance, and the short-term nature of the loan means it should be used strategically. However, when used wisely, private finance can be the tool that keeps a business from collapsing under pressure.

Situations where private lending is a smart move:

• You need funds within days, not weeks

• You have a strong asset base but limited liquidity

• Your business is seasonal or in recovery

• You have a tax bill or creditor issue that needs urgent resolution

• You want to retain control and avoid equity dilution or business restructuring

Private Lending as a Business Safety Net

The Brookvale case study highlights a growing trend: business owners are using private lending as a strategic tool, not a last resort. With commercial property values in Brookvale remaining strong, private loans allow entrepreneurs to unlock the equity in their properties when it matters most.

Innovate Funding specialises in helping business owners across Brookvale and beyond access fast, reliable capital backed by property. Whether for urgent tax obligations, bridging finance, or unlocking working capital, our tailored solutions are designed for real business needs. If you're a business owner in Brookvale facing a tight deadline or unexpected financial challenge, consider speaking to a private lender who understands your market, your property, and your urgency.