Definition
A sole trader is a person trading on their own account under an ABN issued to them as an individual. The business and the person are legally the same, so the owner is personally responsible for all business debts. When a sole trader applies for business finance, lenders assess personal credit history, bank statements, tax returns or BAS and personal assets and liabilities together.
Sole trader is the simplest business structure and the most common starting point for Australian small businesses.
What it means for borrowing
Because there is no legal separation between owner and business, lenders treat a sole trader’s personal and business finances as one picture. Your personal credit file, personal debts and the business’s bank statements all count.
Making applications easier
Keep a dedicated business bank account, lodge BAS on time if registered for GST and keep personal spending separate. Clean, consistent statements are often more persuasive than anything else.
Options
Sole traders draw on the full range, from unsecured working funds and asset finance to low doc and property-backed lending. Our sole trader business loans review explains each. The business.gov.au sole trader page covers the structure itself. To explore finance, make one enquiry.
Common questions
Do lenders deal with sole traders?
Yes. Plenty do, reviewing the owner's credit report, account statements and either tax returns or BAS.
Is a sole trader personally liable for business loans?
Yes. There is no separate entity, so anything the business owes, the owner owes.
Sources and further reading