The Complete Guide to Small Business Restructuring Plans in Australia
Running a small business in Australia isn’t easy especially when cash flow is tight, debts build up, or the ATO starts applying pressure. When things reach that point, many business owners believe liquidation is their only option. But it’s not.
A Small Business Restructuring Plan (SBRP) gives eligible companies a chance to deal with debt while continuing to trade. It’s a formal process introduced by the Australian Government to help small businesses survive financial stress, not shut down because of it.
In this guide, we’ll explain how small business restructuring works, who qualifies, and how short-term finance can support your restructuring plan to stabilise your operations and protect your future.
What Is a Small Business Restructuring Plan?
The Small Business Restructuring (SBR) process was introduced under the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 to simplify insolvency for smaller businesses.
It allows directors to work with a Small Business Restructuring Practitioner (SBRP) to prepare and propose a formal repayment plan to creditors including the ATO while staying in control of their company.
This process offers:
- A clear structure for managing debts.
- Protection from legal action while the plan is developed.
- The ability to continue trading during the process.
It’s essentially a lifeline for businesses that are viable but temporarily overwhelmed by debt.
Who Can Use a Small Business Restructuring Plan?
Not every company qualifies. To be eligible for the SBR process, your business must:
- Have total liabilities of less than $1 million (including tax and trade creditors).
- Be insolvent or likely to become insolvent.
- Be up to date with employee entitlements (superannuation, wages, etc.).
- Have lodged all required ATO returns and activity statements.
If your business meets these criteria, the next step is appointing a Small Business Restructuring Practitioner (SBRP) to guide the process.
How the Small Business Restructuring Process Works
Here’s a step-by-step outline of how the process unfolds:
1) Appoint a Restructuring Practitioner
You formally appoint an SBRP, who takes an objective look at your business and helps you prepare a restructuring plan.
2) Develop the Restructuring Plan
Together, you draft a proposal for your creditors outlining: The total amount owed.
- How much you can repay (usually as a percentage).
- The proposed repayment period (often 3–12 months).
- Funding sources for repayments.
During this stage, creditors cannot take legal action against you.
3) Creditor Voting Period
Once the plan is submitted, creditors have 15 business days to vote. If more than 50% (by value) of creditors approve, the plan becomes binding on all.
4) Plan Implementation
You make repayments according to the agreed schedule. If completed successfully, any remaining debt covered by the plan is extinguished.
Benefits of Small Business Restructuring Plans
1) Directors Stay in Control
Unlike voluntary administration, directors remain in control of daily operations while working with a restructuring practitioner.
2) Protection from Legal Action
Creditors and the ATO can’t initiate recovery actions during the restructuring process.
3) Continued Trading
Your business can keep operating maintaining customers, contracts, and employees.
4) Manageable Repayment Terms
The plan provides structured, realistic repayment terms that fit your cash flow.
5) Avoid Liquidation and Job Losses
It’s a practical alternative to closing down, preserving business value and livelihoods.
The ATO’s Role in Small Business Restructuring
The ATO is often one of the largest creditors in a restructuring plan. If you owe PAYG, GST, or superannuation debt, the ATO will review your plan and decide whether to accept or reject it.
To strengthen your proposal:
- Make sure all lodgements are up to date.
- Include clear cash flow projections.
- Communicate proactively through your practitioner.
A credible plan supported by realistic funding sources (such as short-term finance) significantly increases the likelihood of ATO approval.
How Short-Term Finance Supports Restructuring
Short-term or bridging finance can play a key role in getting your restructuring plan approved and implemented. Here’s how:
- Immediate Access to Capital: Provides the funds needed to make lump-sum offers to creditors.
- Improves Creditor Confidence: Demonstrates commitment to repayment and improves chances of plan approval.
- Protects Cash Flow: Keeps your business running while repayments are made.
- Buys Time: Stabilises operations while you refinance or rebuild profitability.
Funding is often secured against property or business assets and can be arranged quickly typically within 24–72 hours.
Case Study: Restructuring with Finance Support
A family-owned retail business in Brisbane faced $450,000 in ATO and supplier debts after a tough trading period. With support from an SBR practitioner, the directors proposed a plan to repay 60% of the debt over six months.
Using short-term business finance secured against property, they made an upfront payment to creditors, boosting approval odds. The plan was accepted, operations continued, and the company fully recovered within a year.
Key Considerations for Business Owners
Before entering a small business restructuring plan:
- Ensure your financial records are current.
- Confirm eligibility with your accountant or restructuring practitioner.
- Consider short-term funding options to strengthen your proposal.
- Be realistic with repayment forecasts credibility is key.
Restructuring vs. Liquidation
Final Thoughts
The Small Business Restructuring Plan gives struggling Australian businesses a second chance. It’s a practical, affordable alternative to liquidation helping you repay debts, keep trading, and protect your future.
At Bridging Loans, we specialise in short-term finance that supports restructuring and recovery. Fast, flexible, and reliable our funding solutions can help you present a stronger plan and move forward with confidence.
If your business is facing ATO pressure or cash flow difficulties, speak with our team today. Together, we can help you stabilise, restructure, and rebuild.