Secured business loans: how borrowing against property really works

A secured business loan is money your business borrows with a property standing behind it. If the business can’t repay, the lender has the right to recover the debt from that property, and that safety net is exactly why secured lenders can say yes to bigger amounts, younger businesses and messier credit files than lenders who rely on turnover alone.

That trade-off is the whole story. You give the lender a stronger position; the lender gives you more room. This page explains what counts as security, how lenders decide how much to offer, what the loan costs, and when putting a property on the line is the wrong move.

What does “secured” actually mean for a business loan?

Every loan has a promise to repay. A secured loan adds a registered right over an asset, so the lender doesn’t have to rely on the promise alone. The government’s business.gov.au funding guide puts it simply: debt finance “often requires collateral”.

For business finance in Australia, the strongest collateral is real property, and that’s what this page covers. It can be:

• Your home or a director’s home, even if it still has a bank loan on it.
• An investment property, residential or commercial.
• The business premises, if you or a related entity own the building.
• Vacant land, though lenders are choosier about it.

The lender records its interest on the land title in one of three ways: a first mortgage, a second mortgage behind an existing lender, or a caveat. Which one applies depends mostly on what’s already on the title and how long the money is needed.

Lenders often also take security over the business’s own assets through a general security agreement. That’s registered on the Personal Property Securities Register, which, as the PPSR explains, covers personal property such as stock, equipment and debts but not land or buildings. Property is the anchor; the PPSR registration is usually a back-up.

Who is a secured business loan best suited to?

Property-secured lending tends to be the right tool when the amount you need is bigger than your bank statements can justify. Typical situations include:

• Buying a business or a partner’s share, where goodwill isn’t something an unsecured lender will fund on its own.
• Clearing an ATO debt in one hit rather than living with a payment plan.
• Funding a contract or growth step that will pay off over months, not weeks.
• A business with patchy trading history, such as a new venture, a recent restructure or a bad year.
• Owners with credit problems, where a past default would sink an unsecured application.

If your turnover is strong, your credit is clean and you need a moderate sum, an unsecured business loan sized on bank statements may be quicker and keeps your property free. The secured or unsecured tool gives you a fast steer.

How do lenders work out how much you can borrow?

Secured lenders look at three things, roughly in this order.

1. The property. Its estimated value, location, type and how easily it would sell. A house in a capital-city suburb is easier security than a rural block or a specialised commercial building.

2. The equity. Value minus everything already owed against the title. Lenders will only lend up to a set proportion of value, counting existing debt, so the more equity there is, the more room there is to borrow.

3. The way out. Every secured lender wants to know how the loan ends: from business cash flow, from the sale of an asset, from a refinance to a bank once accounts are lodged, or from a settlement that’s already on the calendar. A clear exit can matter more than a perfect credit file.

Factor	What helps	What hurts
Property type	Metro house or unit, standard commercial	Specialised, rural or hard-to-sell property
Equity	Plenty of room after existing loans	Title already heavily borrowed against
Exit plan	Dated, documented and realistic	“We’ll work it out”
Purpose	Clear business use with quotes or a contract	Vague or partly personal
Credit history	Explained up front	Surprises found on the credit check

Once you can answer those points, you’re ready to check your options in about a minute.

What does a secured business loan cost?

There’s no single price, and any page quoting one is guessing. Pricing is set for each loan based on the security, the amount, the term, the loan’s position on title and the borrower’s circumstances. A first mortgage over a city home for a well-documented business generally prices better than a caveat over a regional property for a business with tax debt.

The cost is usually made up of:

• Interest, which with many non-bank secured lenders can be paid monthly, prepaid for a period, or added to the loan so there’s nothing to pay along the way.
• An establishment or application fee, charged when the loan is set up.
• Legal and settlement costs for preparing and registering the mortgage or caveat.
• A discharge fee when the loan is repaid and the security removed.

Interest on money borrowed for business purposes is generally deductible, so talk to your accountant. One related point: if the loan is clearing ATO debt, the ATO has confirmed that general interest charges incurred from 1 July 2025 are no longer tax deductible. That has changed the maths for many owners comparing a payment plan with refinancing the debt.

Illustrative example

Illustrative example: A small civil contracting business wins a council project that needs new plant and three months of wages before the first progress claim is paid. The business is only eighteen months old, so its bank statements support perhaps $60k unsecured. The owner needs $350k. Her home is worth around $1.2m with $400k owing to her bank. A second mortgage behind the bank loan funds the $350k without touching the home loan, and the plan is to repay from progress claims over the following year. The property made the deal; the contract made the exit believable.

When is offering property security a bad idea?

Secured lending is powerful, but it isn’t always the right call.

• When unsecured finance will do. If turnover supports the amount, don’t put your home on the line for convenience.
• When there’s no believable exit. Borrowing against property to plug a hole that keeps reopening just moves the problem closer to your front door.
• When the purpose is personal. These loans are for business purposes only.
• When the property is the only thing you have left. If losing it would leave your family with nowhere to live, map the downside before you sign.

A good adviser will tell you when a lighter option fits better, such as a business line of credit for short gaps.

Ready to see what your property could unlock?

If you own property with some equity and your business needs more than its bank statements alone can carry, a secured loan is worth a proper look. Starting is quick: the enquiry takes roughly a minute and doesn’t trigger a credit check. Your details stay with us rather than being sent out to a queue of lenders, so you won’t spend the afternoon fielding calls. Someone experienced reads what you’ve told us and phones you to talk it through. The more accurate your answers on property value, existing debt and purpose, the closer the first option will be to the right one.

Find out what you could borrow →