Compare loans to pay business tax debt

Before you become personally liable for your business’s tax debt, you may want to explore a range of loan options to ease the financial pressure. Covering a tax debt, no matter what size your business is, can have a damaging impact on your cash flow and operations. If your business has a large tax debt that you can’t pay up front, tax debt loans could be an option to explore.

What are tax debt loans?

Tax debt loans are short-term financial solutions specifically tailored to help small- to medium-sized businesses settle outstanding tax debt. Terms are also usually more flexible, allowing business owners to set the pace at which they repay the loan.

These are especially handy if you know your business will be able to make up for the amount it owes in taxes within a few months’ time. And in addition to paying taxes, they can also be used to cover employee wages, day-to-day expenses and unpaid bills.

Compare business loans to pay your tax debt

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Name	Product	Filter Values	Loan amount	APR	Requirements
First Down Funding business loans			$5,000 – $300,000	Fee Based	At least 1 year in business, an annual revenue of $100,000+, and a minimum credit score of 400	Alternative financing up to $300K with highly competitive rates.	Check eligibility More Info		loading Fetching your data…
Lendio business loans			$500 – $5,000,000	Starting at 6%	Operate business in US or Canada, have a business bank account, 560+ personal credit score	Submit one simple application to potentially get offers from a network of over 300 legit business lenders.	Check eligibility More Info		loading Fetching your data…
ROK Financial business loans			$10,000 – $5,000,000	Varies	Eligibility criteria 3+ months in business, $15,000+ in monthly gross sales or $180,000+ in annual sales	A connection service for all types of businesses — even startups.	Check eligibility More Info		loading Fetching your data…
OnDeck small business loans			$5,000 – $250,000	As low as 9.99%	600+ personal credit score, 1 year in business, $100,000+ annual revenue	A leading online business lender offering flexible financing at competitive fixed rates.	Check eligibility More Info		loading Fetching your data…
Rapid Finance small business loans			$5,000 – $1,000,000	Fee based	Steady flow of credit card sales, bad credit OK	Check eligibility More Info		loading Fetching your data…
Fundbox business loans			$1,000 – $100,000	4.99	You must have an established business.	Get flat rate, short-term financing based on the financial health of your business, not your credit score.	Check eligibility More Info		loading Fetching your data…
Kickpay e-commerce business loans			$20,000 – $1,000,000	Not applicable	At least $250,000 in the past 12 months of revenue, e-commerce business, use a 3rd party fulfillment center for storing and shipping inventory, at least one US location.	Get a loan for your e-commerce business based on your sales history.	Check eligibility More Info		loading Fetching your data…
LendingClub business loans			$5,000 – $500,000	12.15% to 29.97%	12+ months in business, $50,000+ in annual sales, no bankruptcies or tax liens, at least 20% ownership of the business, fair personal credit score or better	With loan terms that vary from 12 to 60 months, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.	Check eligibility More Info		loading Fetching your data…
Monevo business loans			$500 – $100,000	3.99% to 35.99%	Credit score of 500+, legal US resident and ages 18+.	Use this connection service to get paired with a loan you can use for business.	Check eligibility More Info		loading Fetching your data…

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What should I consider when looking for a tax debt loan?

Keep these factors in mind when comparing your tax debt loan options:

• Secured versus unsecured loans. While you can potentially get a business loan without providing any security, a secured loan can potentially lead to longer loan terms and lower interest rates.
• Interest rate. Interest rates vary from one lender to the next, but will generally depend on your business’s revenue and age as well as your personal credit score.
• Fees and other charges. Fees and charges associated with your tax debt loan may have a noticeable effect on how much you end up paying over the course of the loan, so make sure you review the fee structure before you apply.

How does tax debt affect my ability to get a business loan?

Tax debt, even small amounts, will show up as red flags to lenders. Many lenders may see your business as a risk — after all, if you can’t afford to pay your taxes, how can you afford to pay for your loan? Because of this, tax debt will affect the loan terms you’re offered, if you’re offered terms at all.

This limits your options to short-term business loans that can be used to quickly cover big expenses. Otherwise, long-term lenders like banks may impose higher interest rates, deny offers for unsecured loans and only offer short repayment periods, all of which can greatly impact your ability to repay a loan in the future.

Are tax debt loans tax deductible?

It depends. If a business is paying interest on a loan, where the loan was taken out for the purposes of maintaining that business, then you may be able to deduct those interest payments from your taxes. If the continuance of your business, and therefore your ability to earn an assessable income, is dependent on the business paying off its tax debt, then a loan used specifically to pay off tax debt might also be tax deductible.

As with all large financial decisions for your business, consult a tax accountant or other expert for more information.

How else do business loans affect my taxes?

Are there benefits of taking out a tax debt loan?

Think a tax debt loan is right for you? Here are two perks to keep in mind:

• Cover your debts. If you can’t arrange a payment plan, a tax debt loan will help your business continue operating while you budget for loan payments.
• Get professional tax help. Some tax debt loan providers assign you a representative who can help you navigate IRS documents and learn about other important information.

What drawbacks should I be aware of?

Consider these potential drawbacks before taking out a tax debt loan:

• Fees and charges. Some lenders charge high fees for providing tax debt loans and related services, so make sure to check what costs you’ll have to pay when you apply.
• Compounding debt. Taking on another loan to cover outstanding debts can be risky — you could potentially start a cycle of debt that is difficult to break.

What other loan options can I consider?

If you’re not sure a tax debt loan is right for your business, you may want to consider one of these alternatives instead:

Invoice financing

Invoice financing uses outstanding invoices to fund cash advances before the invoice is paid. If you’re waiting on payment from invoices that could help you pay your tax debt, this could be an option to consider. Depending on the lender, you could borrow up to 85% of the total value of your invoices to settle your tax debt.

Advantages of this option include:

• Fast approval.
• More accessible than other loan types.
• No real estate security necessary.

Unsecured business loans

Unlike secured business loans, unsecured loans are granted without property or other valuable assets needed for collateral. Instead, the overall state of your business is evaluated and the loan may be granted if the lender feels you can honor your repayments. The terms differ depending on the lender, and repayment periods vary between one and seven years.

To qualify, lenders may consider:

• How long you’ve been in business.
• Your personal and business credit history.
• Your business’s turnover and cash flow.

Bottom line

When tax time is upon you and your business doesn’t quite have enough to cover it, a tax debt loan could be the difference between owing the IRS a huge amount at once and paying for that same amount over time. However, many short-term business loans that are used to cover taxes require daily payments with high interest rates, so compare your business loan options to make sure you’re getting the best deal.

Frequently asked questions about tax debt loans