Business loans for a one-director company

Lots of Australian businesses are a company with exactly one director, one shareholder and one person doing the work. You might be a consultant, an electrician, a clinic owner or an online seller who set up a Pty Ltd on your accountant’s advice. On paper there’s a separate legal entity. In real life, the company is you.

Lenders understand that, and they assess a one-director company with both hats in view.

Is a one-director company treated differently from a sole trader?

In law, yes. business.gov.au describes a company as a separate legal entity that “can incur debt, sue and be sued”. The company signs the loan, owns the assets and carries the debt on its own balance sheet.

In lending practice, the gap is narrower than people expect:

• The lender reads the company’s bank statements, BAS and financials.
• It also looks at your personal credit file, because you control the company.
• It will almost always ask you to sign a personal guarantee, which puts you back on the hook if the company can’t pay.

So the company structure doesn’t make you invisible to a lender. What it does do is keep the business’s money, records and obligations in one clearly labelled box — and lenders like boxes.

Why do lenders want a personal guarantee from the only director?

Because a small company can be wound up, and its assets may not cover the debt. The guarantee is the lender’s way of saying: “if the company can’t pay, you will.” For a one-director company it’s close to universal.

A guarantee is a serious promise, and it’s worth knowing exactly what you’re signing. Our page on personal guarantees for business loans explains the difference between limited and unlimited guarantees and the questions to ask before you sign.

What do lenders look at for a solo company?

Area	What they want to see
Company bank statements	Regular income, no constant overdrawn days, business costs paid from the business account
BAS and ATO position	Lodgements up to date; any ATO balance explained and managed
Director’s credit file	Your personal history, checked once you choose to proceed
Security	Property owned by you or the company, if the loan is secured
Clean separation	Company money kept in the company; director drawings properly recorded

That last row trips up more solo directors than any other. Directors of small companies sometimes treat the company account like a personal wallet. The ATO’s Division 7A rules say a payment or loan from a private company to a shareholder “can be treated as a dividend” for tax purposes unless it’s repaid or placed on a complying loan agreement by the company’s lodgment day. To a lender, a messy director’s loan account is a question mark. Our page on borrowing from your own company explains why.

Can I use my house to secure the company’s loan?

You can, and many solo directors do when they need a larger amount. The structure usually looks like this:

1. The company is the borrower.
2. You give a personal guarantee.
3. You give a mortgage over your property to secure that guarantee (a “third-party mortgage”, because you’re not the borrower).

Property-secured business loans run from $20,000 to $5,000,000, with first mortgages, second mortgages and caveat loans all possible. If the home is jointly owned with a partner who isn’t in the business, they’ll need to sign too — see borrowing against a home in joint names.

If you’d rather leave the house out of it, unsecured options for trading companies typically run from $5,000 to $500,000 and are sized on turnover and bank statements. Tell us what you need and we’ll say honestly which path is realistic.

What about putting my own money into the company?

Many solo directors fund the company themselves at the start, or top it up in a tight month. That money usually sits in a director’s loan account as a debt the company owes you. It’s legitimate and common, but it needs to be recorded properly. Our page on lending money to your company covers how lenders view it and why your accountant should document it.

Common questions from solo directors

“My company is new but I traded for years as a sole trader.” Say so. Lenders can often look through to your earlier history, especially if the same work simply moved into a company.

“I pay myself irregularly.” That’s fine, but make sure it’s recorded as wages, director’s fees, dividends or a documented loan — your accountant will know which. Random transfers with no label are what raise eyebrows.

“I have a director penalty notice.” That’s urgent. The ATO says directors have 21 days from the date the notice is posted to act. We see these regularly; tell us straight away.

Illustrative example: A solo IT consultant has run her Pty Ltd for two years. The company’s account shows steady monthly invoices from three clients, and she needs $60,000 to hire and equip a junior. An unsecured loan to the company with her personal guarantee is a realistic starting point, and her home doesn’t need to be offered.

Talk it through with one person

You set up a company to keep things tidy; your borrowing should be tidy too. A quick enquiry takes about 60 seconds and won’t trigger a credit check. It goes to one specialist — not a list of lenders — and that person will call you to understand the company, your role and what you want to achieve. The more accurate your answers on the form, the faster we can find the option that actually fits.

Start your company’s enquiry →