Home / Straight Answers / Sole trader to company

Straight Answers · Bank said no

I'm going from sole trader to a company. Does that reset the clock?

Bayley Clarke · Mortgage broker on the road · Last checked 3 September 2026 · 3 min read

The one minute version. The rest of this page is the detail underneath it.

Why the banks get nervous

For most banks, they get very concerned when you move from sole trader to company. Which is so ridiculous in my mind, because it actually shows that your business is growing. You're moving from being the business to then having a separate entity that you own that is the continuation of the same business.

The bank's problem is mechanical. Its policy says two years of financials in the entity that's earning the income, and the new company has none. Its systems read a new ABN as a new business, even when it's the same customers, the same tools and the same you. So there are actually a lot of banks that will tell you to wait 12 to 18 months for new financials in that company before they'll consider letting you borrow.

The strictest version of this is worth knowing: some lenders' one-year income paths require every entity in the picture to have two full financial years behind it. A fresh company fails that test on day one, no matter how strong the sole trader history was. Those lenders are out until the company has its second return.

The common sense path

There are a lot of banks that also have a common sense approach. They're going to get your accountant to confirm that there's been no other changes to the business, that it's a sign of the business growing and maturing, and it's just been a simple structure change. Sometimes just with that accountant's letter, your income is good to use for borrowing capacity.

What the lender is looking for in that letter: same trade, same clients, same owner, no break in trading, and the sole trader's ABN history carried across. Some lenders count your trading history from the original ABN registration, not the new one, which is the whole ballgame. A few will also look at your prior years in the same field as an employee if the self-employed history is short.

I have a lot of clients that go through this journey, where they go from sole trader to a company because it's a reflection of their business growth. We generally get an accountant's letter to confirm it's a continuation. So no, it doesn't mean you need to reset the clock. It means picking the lender that doesn't make you.

Timing it, if you can

If the restructure hasn't happened yet and a purchase is in the next year, talk to me before your accountant sets it up. Sometimes it's worth lodging the loan on the sole trader's returns first and restructuring after settlement. Sometimes the company's first return is close enough that waiting for it is the cleaner path.

If it's already done, the question is how many lenders accept the continuation letter and which of them suit the rest of your situation. That list is shorter than the full panel, but it's not short. The wage and profit read applies once you're in.