ABN and trading history

Business finance is finance for a business, and the ABN is how a lender establishes that the business exists, what it does and how long it has been doing it. Most business lenders require an active ABN, and many require GST registration as well depending on the facility.

There is a compliance dimension too. Credit provided wholly or predominantly for business purposes is regulated differently from consumer credit, and the ABN is part of how that distinction is established.

Lenders generally measure trading time from the registration date of the ABN you are using now, not from when you first started doing the work. This catches people out regularly.

If you traded as a sole trader for several years and then moved to a company structure, the company has a new ABN and, to most lenders, a short trading history. Your experience did not change and your customers did not change, but the measure did.

Restructuring is often the right commercial decision for tax, liability or growth reasons, and this is not an argument against it. It is an argument for sequencing.

If you know finance is coming, it is worth understanding the effect on your options before the restructure rather than discovering it during an application. Your accountant and a finance specialist should ideally both be in that conversation.

A short trading history narrows the field but does not always close it. Some lenders assess recent trading rather than requiring two full years, and asset-backed finance such as equipment or vehicle finance is often more accessible to a newer business than an unsecured facility, because the asset supports the arrangement.

What is available depends on the lender and on the rest of your position, and no one can tell you the answer without looking at the specifics.

Most business lenders will need one. If you are about to register, that is worth saying, because it changes what a specialist can usefully do and when.

Registering an ABN is free and done through the Australian Business Register at abr.gov.au. Whether you should also register for GST depends on your turnover and circumstances, which is a question for your accountant.