Business Loans with Tax Liens

Crystal Business Funding provides business loans for business with tax liens. Apply Now for quick and easy working capital for your business.

Business Loans with Tax Liens may seem impossible, but that's not the case!

A lot of People asked can I get a business loan if I owe the IRS?

Fortunately, there are loan solutions for businesses with tax liens, obviously it would make things much easier if your company has a payment plan with the IRS. Although funding options are limited for businesses with tax liens, there are a handful of lenders out there that would be willing to provide working capital.

Tax Liens on business

A tax lien, is a lien on your business that helps the IRS with collecting owed taxes, and also warns lenders of the legal right by the government to the businesses assets.

A tax lien won't force you to pay your tax debt, but it will definitely make it challenging to obtain a loan, or get a credit card.

Tax liens can be imposed by federal, state or local tax authorities. Here are the types of business tax liens:

Federal Tax Lien on Business:

The IRS files a federal tax lien for unpaid federal taxes, affecting all business assets.

State Tax Lien on Business:

Imposed by state tax authorities for unpaid state taxes, the impact of a state tax lien varies based on the state that you're in.

Franchise Tax Lien:

Specific to businesses that fail to pay franchise taxes, affecting the business’s ability to operate.

The Impact of Tax Liens on Your Business

Having a tax lien on your business can damage your business operations and financial situation:

Loan Approval:

Lenders view tax liens as a red flag, do the lenders that will provide funding will usually charge higher interest rates, and keep the terms shorter.

Reputation:

Depending on who you do business with, a tax lien on your business can damage your business’s relationships with suppliers, vendors and partners at risk.

Can You Get a Business Loan with a Tax Lien?

So back to the original question, can you get a business loan with a tax lien on your business?

The answer is yes. Getting a business loan with a tax lien is possible! Here are the best ways to get an approval for a loan with a tax lien:

Transparency:

Tell the lender about the tax lien as soon as you apply, don't wait for them to find it. Your honesty will give the lender confidence that you'll resolve the issue.

Repayment Plan:

Show the lender that you are in a payment plan with the IRS or state. If you're not in a payment plan, get into one as soon as possible.

Alternative Lenders:

There are alternative lenders that literally specialize in getting you an approval even though your business has a tax lien.

Loans Available for Businesses with Tax Liens

Merchant Cash Advance:

A merchant cash advance (MCA) is where a lender will give you a loan in exchange for a percentage of your future receivables, they are basically buying some of your future revenue, at a discounted price.

Invoice Financing:

If your business relies on invoices, invoice financing may be the best solution. This type of loan is basically where you sell your unpaid invoices to a lender for a little cheaper than the invoice amount.

Equipment Financing:

equipment financing is where a lender will pay for the specific equipment you want to get, but they'll put a lien on it, and use it as collateral.

Bridge Loans:

Short-term loans are similar to the MCA loans mentioned before, a short-term loan will be based on the businesses revenue, it's a quick process but can be higher interest rates.

The Financial Industry's View on Tax Liens

The financial industry views tax liens as a risk factor. According to the IRS, over 1 million tax liens are filed each year.

Lenders evaluate tax liens carefully, considering them a sign of financial instability, the logic behind that is simple, ‘if your having a hard time paying tax, how will you be able to make the loan payments’

However, there are a couple of alternative lenders that specialize in lending to businesses with tax liens. Alternative lenders are more willing to take calculated risks.

How to get out of a Tax Lien

Whether or not you get a business loan, you should still take care of the tax lien on your business.

Negotiate: Work with the IRS or state, to set up a payment plan.
Improve Cash Flow: Get back on a healthy financial position.

A tax lien on your business is tough, but with the proper financial help, you will get control of this situation easily and continue growing your business.