Secured business loans in Australia: borrowing against property and assets

A secured business loan is money lent against something of value that the lender can take and sell if repayments stop. In Australia that “something” is usually real estate — a home, a factory, an office suite — but vehicles, plant, stock and receivables can also do the job for the right type of facility. The security is what lets a lender say yes to amounts, terms and borrowers it would otherwise turn away.

Secured business loans in Australia are the backbone of small business credit. The RBA’s October 2025 Bulletin found that unsecured lending has stayed below 5 per cent of SME credit, that around half of small loans to SMEs are secured by assets other than residential property, such as vehicles and equipment, and that new residentially secured loans are on average about four and a half times larger. In other words, most business owners who borrow do so against something, and property supports the largest amounts. If you want the full map of loan types first, our business loans guide lays them all out.

What counts as collateral for a business loan?

Collateral is any asset the lender can register an interest over and convert to cash if needed. business.gov.au describes it simply as property or assets a lender can take ownership of when a loan isn’t repaid. In practice, lenders rank collateral by how reliably it holds value and how easily it sells.

Type of security	How it’s held	What it usually secures	Lender’s view
Residential property	Registered mortgage or caveat	General business loans of almost any purpose	Strongest and most widely accepted
Commercial or industrial property	Registered mortgage	Larger loans, property purchases, refinancing	Strong, but valued more conservatively
Vehicles and equipment	Security interest on the PPSR	Equipment finance for that asset	Good if there’s an active resale market
Unpaid invoices	Assignment of receivables	Invoice finance	Depends on who your customers are
Stock and general business assets	General security agreement on the PPSR	Usually supports other lending rather than standing alone	Weak on its own

Security over personal property such as vehicles and equipment is recorded on the Personal Property Securities Register, the national register run by AFSA. Mortgages and caveats over land are lodged with the land titles office in your state.

How does a business loan secured by property work?

A business loan secured by property works by the lender registering a mortgage or caveat on the title, then lending a proportion of the property’s value. That proportion is the loan-to-value ratio, or LVR. The lender values the property, subtracts what is already owed against it, applies its maximum LVR and arrives at a ceiling.

The ceiling is not the offer. Within it, the lender still asks whether the loan can be repaid from trading, refinanced later or cleared by a planned sale. A business with modest turnover but a clear exit — say, a property settlement in nine months — can borrow comfortably against strong security. A business with no believable way out will struggle even with plenty of equity.

There are three common structures, and the ranking of each matters:

• First mortgage. The lender is first in line if the property is sold. This is the cheapest and most flexible position, and it’s what banks generally insist on.
• Second mortgage. A second lender sits behind the existing home loan. Useful when the first mortgage is cheap and you don’t want to disturb it, but the price reflects the second-ranking position.
• Caveat. A caveat records the lender’s interest on title without a full registered mortgage. Caveat loans are typically short, used for urgent needs, and priced for that.

Why choose a secured business loan over an unsecured one?

You choose security when the amount, the term or your circumstances push past what an unsecured business loan can do. Unsecured facilities through our network for trading businesses typically run from $5,000 to $500,000 and are sized on turnover and bank statements. Once the need is bigger than that, longer than a couple of years, or the business has thin financials or patchy credit, property security usually opens more doors.

Question	Secured	Unsecured
How is the loan sized?	Security value, LVR, then repayment ability	Turnover and spare cash in bank statements
Typical term	Short bridging terms through to long amortising loans	Months to a few years
Cost	Usually lower for the same borrower	Usually higher
Credit history	Older issues can be outweighed by equity	Much less forgiving
What’s at risk	The property or asset	Director guarantee, business assets
Paperwork	Valuation, title, security documents	Bank data, ID, sometimes BAS

The trade-off is real: a secured loan puts the asset on the line. That’s why the purpose and exit deserve as much attention as the price.

Who suits a secured business loan?

Secured lending suits businesses that own property — or whose owners do — and need any of the following:

1. A larger sum than turnover alone would support, such as buying a business, funding a big contract or clearing several debts at once.
2. A longer repayment period, so the instalments fit monthly cash flow rather than squeezing it.
3. A way around a recent bank decline, credit blemish or ATO debt that an unsecured lender would treat as a stop sign.
4. Funding while financial statements are behind, where a low doc approach leans on the property instead.

It suits less well when the need is small and short — a few weeks of stock, say — because valuation and legal costs can outweigh the saving. A line of credit or short unsecured loan may be the better tool there.

If you’re unsure which side of the line you fall on, a specialist can tell you quickly. Start a 60-second enquiry — there’s no credit check at that first step.

What do lenders check before approving a secured loan?

Lenders check four things, and the security is only one of them:

• The property. Value, location, type (lenders are more cautious with rural, specialised or very small units), and what’s already owed.
• The borrower. ABN, structure, time trading, credit file and any tax debts.
• Repayment. Bank statements, BAS or financials showing the loan can be paid — or, for short loans, a documented exit such as a sale or refinance.
• The purpose. Business purposes only. Lenders want to see where the money goes and why that amount.

Expect anyone on the title to sign. If a spouse or family member owns part of the property, they’ll be a mortgagor and often a guarantor, and lenders usually want them to get independent advice. Our page on director’s guarantees covers what signing means.

Illustrative example: equity versus turnover

Purely illustrative, no real business: a small engineering workshop wants $400,000 to buy a competitor’s equipment and customer list. Its turnover supports perhaps a third of that unsecured. The two directors own a home worth around $1,100,000 with $350,000 still owing.

A lender working to a 70 per cent LVR would put the ceiling at roughly $770,000, less the $350,000 owed, leaving about $420,000 of usable equity. The $400,000 loan fits — just. The lender then checks the workshop’s cash flow can cover repayments once the acquired work starts coming in, and agrees a second mortgage so the directors’ cheaper home loan stays untouched. Our borrowing power estimator runs this same sum with the LVR you choose.

How do you prepare for a secured business loan?

Preparation shortens the process more than anything a lender does. Before you apply:

1. Get a recent rates notice and a statement for every loan already on the property.
2. Pull six to twelve months of business bank statements and your latest BAS.
3. Write two or three lines on the purpose, the amount and how it will be repaid or refinanced.
4. List every existing business facility and its repayment.
5. Check that everyone on title is willing to sign.

The document checklist builder produces a printable list for a property-secured loan. For how lenders weigh these documents, see how much can I borrow.

What are the risks of borrowing against property?

The main risk is losing the asset if the business can’t repay. Lesser risks are worth knowing too: valuations that come in lower than expected, legal and valuation costs that apply even if you don’t proceed, and second-ranking or caveat loans that become expensive if they run past their intended term. The fix is the same for all of them — borrow for a defined purpose, size the loan to a realistic repayment, and have a plan B for the exit.

Ready to find out what your security could support?

If you or the business own property and need funding for a genuine business purpose, the quickest way to know where you stand is to ask. Check whether you qualify with a short enquiry. Nothing touches your credit file at that stage, your file isn’t sent out to a crowd of lenders, and a real person reviews it and calls you. Give accurate figures for the property, existing debt and turnover — it’s what lets us match you to the right lender the first time.