Using property your company owns as security for a business loan

Yes. A property owned by your company can be the security for a secured business loan, either for that company or for a related business in the same group. The owning company signs the mortgage or caveat documents, and directors usually sign personal guarantees as well. Lenders add a few company checks to the normal property assessment, so current ASIC records make everything smoother.

It’s a common set-up. Plenty of owners bought their premises, a depot or even an investment house through a company years ago, often on their accountant’s advice. When the business needs money, they wonder whether the property being “in the company” complicates borrowing against it. It adds a few steps, but it’s well-trodden ground.

Can a company give its property as security?

It can. business.gov.au’s comparison of sole traders and companies explains that a company can own property or assets, and these “belong to the company – not the directors nor the shareholders”. The company is generally liable for its own business debts, and it can sell its assets to pay them.

That’s exactly why a company can mortgage its property. It’s the company’s asset to offer. The lender’s first job is simply to confirm that the company is the registered owner, that it’s properly set up, and that the right people are signing on its behalf.

The usual structures for property-secured lending apply. A first mortgage where there’s no existing debt, a second mortgage behind an existing lender, or a caveat for a shorter need. The secured business loans page explains how each one works.

What will the lender check about the company?

On top of the normal property questions, expect the lender to look at:

• ASIC records. A search of ASIC’s company register shows the company’s name, ACN, type, registration date, next review date, registered office suburb and lodged documents. Paid extracts show officeholders, including current and historical details.
• Who the directors and shareholders are, and whether they match what you’ve told the lender.
• Who signs. The company signs the security documents through its directors; directors usually sign guarantees in their personal capacity as well.
• The company’s own debts, including any existing mortgages on the title and any registered security interests over its other assets.
• The trust deed, if the company holds the property as trustee of a trust.

Good housekeeping helps. If the company’s officeholders or registered office have changed and ASIC hasn’t been told, update the records before you apply. If you want a quick read on where you stand first, send us a short enquiry with the company name and what it owns.

What if the property company and the trading company are different?

This is the most common wrinkle. A family group might have a property company that owns the building, a trading company that runs the business, and perhaps a family trust holding the shares. The trading company needs the loan; the property company has the equity.

That can work, but the lender will want to understand the whole picture:

Structure	Who borrows	Who provides security	Who usually guarantees
One company owns the property and trades	That company	That company	Directors
Property company owns, trading company borrows	Trading company	Property company	Directors, and often the property company too
Corporate trustee owns property for a family trust	Trading entity	Trustee company, as trustee	Directors; the trust deed is reviewed
Directors own property personally, company trades	Company	Directors personally	Directors

When one company backs another’s debt, lenders want to see why it makes sense for the company giving the security, and that the people signing for each company are authorised to do so. Common directors and shareholders across the group make that story straightforward. Unrelated shareholders in the property company need to be on board.

Does a lease between the companies matter?

Often, yes. When a property company owns premises and the trading company occupies them, the lender will ask whether there’s a written lease and what rent is paid. A clear lease at a sensible rent helps in two ways. It shows the property is earning income and is occupied by a known tenant, and it explains the rent line in the trading company’s bank statements.

Where there’s no lease, or the rent is informal and irregular, expect questions. That doesn’t stop a loan, but tidying it up beforehand, with your accountant’s input, makes the property company’s position much easier to read. It also matters if the plan for repaying the loan relies partly on rent flowing from one company to the other: a lender will want to see that rent actually arriving, month after month, not just written in a document.

Will the lender want security over business assets too?

Often. Alongside the property, many business lenders take a general security agreement over the borrowing company’s assets, registered on the Personal Property Securities Register. The PPSR explains that personal property includes almost everything “that isn’t land, buildings or fixtures”, so a GSA covers things like equipment, stock and receivables rather than the building itself. It also makes the point that “a security interest is not an ownership interest”, so day-to-day trading carries on as normal. You can read more on the PPSR’s page about security interests.

What tends to slow these deals down?

Most delays with company-owned security come from paperwork, not policy:

• Out-of-date ASIC details, especially directors who have left or a registered office that has moved.
• Overdue annual reviews or fees, which make the company look less tidy than it is.
• Missing trust deeds or variations where a trustee company holds the property.
• A shareholder outside the family who hasn’t been told the property company is being asked to give security.
• Old mortgages or caveats on the title that were repaid but never formally removed.

Each of these is fixable, and fixing them before you apply usually saves more time than anything else you can do.

Illustrative example: the depot in the property company

Illustrative example. A transport business is run by a trading company owned by two brothers. Years ago, on their accountant’s advice, they bought their depot through a separate property company with the same two directors and shareholders. The depot is worth about $1.8m and has no debt.

The trading company wins a long-term freight contract and needs $600k for two prime movers and working capital while the first invoices are paid. The trading company borrows, the property company gives a first mortgage over the depot, and both brothers sign personal guarantees. Because the ASIC records for both companies were current and the directors match, the lender’s company checks are straightforward. The loan is repaid over the contract term from freight income, and the depot stays in the property company throughout. The commercial property loans page covers buying or refinancing premises like this one.

Is property security the right call at all?

Not always. If the trading business has strong, steady turnover, an unsecured or cash-flow option, typically $5k to $500k sized on bank statements, may do the job without touching the property. The secured or unsecured tool gives a quick steer. Property security earns its keep when the amount is larger, the need is longer, or the trading history doesn’t yet tell the full story.

Company owns the property? Let’s see what it can do

If your company holds property with equity and the business has a clear use for funds, finding out what’s possible is quick. The enquiry takes about 60 seconds and there’s no credit check when you first enquire. We don’t push your details out to a pile of lenders, so you won’t be fielding calls from strangers. A real person looks at the property, the companies involved and what the money is for, then calls you to talk it through. Please fill the form in accurately, including which entity owns the property and which one needs the loan, so we can match the right lender first time.

See what your company’s property could unlock →