Can You Get a Business Loan With an Active IRS Tax Lien?
Quick Answer
Traditional banks — and SBA lenders — will not approve business loans when a federal tax lien is on record. The only loan product that works with an active IRS lien is tax debt financing: a specialized lender uses the IRS tax lien subordination process to take a priority position, pays off the IRS, and releases the lien — converting your IRS debt into a conventional business loan.
Why Banks Reject Applications With IRS Liens
A Notice of Federal Tax Lien (NFTL) attaches to all current and future business assets. Any bank sees this as a competing security interest that takes priority over their collateral claim. Banks have both regulatory and practical reasons to decline — they cannot legally secure a loan against assets already encumbered by a senior IRS lien.
The Tax Lien Subordination Solution
Under IRC Section 6325(d), the IRS issues a Certificate of Subordination of Federal Tax Lien, which gives a specific lender priority over the IRS lien for identified collateral. The lender funds the loan, pays the IRS in full, and the IRS issues a Certificate of Release within 30 days. Your business then has a clean lien record and a conventional loan from the lender — not the IRS.
After the Lien Is Released
Once the federal tax lien is released, your business becomes eligible for conventional financing again: SBA 7(a) loans, equipment financing, commercial real estate loans, and business lines of credit. Many businesses use tax debt financing specifically to restore this access.
Apply for Tax Debt Financing — Free Assessment
No obligation. No upfront fees. Decision in 24-72 hours. Minimum tax debt: $10,000.
Tax Funds is a financing marketplace — not a lender, CPA firm, or law firm. Content is for informational purposes only.