Quick answer
A property-backed business loan uses the equity in a home, investment property or commercial premises to secure money for a business purpose. Amounts run from $20,000 to $5,000,000. The lender values the property, subtracts what's owed and lends within its limits. Everyone on the title usually has to agree and sign, and the loan must be used for the business.
Key points
- Equity in a home, investment property or commercial premises can secure $20,000 to $5,000,000
- Every owner on the title usually needs to consent and sign
- A valuation confirms what the property supports
- The money must be used for business purposes
- Have a clear plan for repayments and, for short terms, the exit
Plenty of Australian businesses are sitting on their biggest funding source without realising it: the equity in a house, an investment unit or the shop they trade from. A property-backed business loan turns some of that equity into working money.
It’s powerful. It’s also serious. Here’s how to use it with your eyes open.
What is a property-backed business loan?
It’s a business loan secured by real estate. The property can be:
- Your home (owner-occupied residential)
- An investment property (residential you rent out)
- Commercial property (your premises, a warehouse, a shop, an office)
The lender registers a first mortgage, a second mortgage or a caveat over the title, and lends between $20,000 and $5,000,000 depending on the equity and your plan. The money is for business purposes only, though the security itself can be personally owned.
How is the equity worked out?
Equity is the gap between what the property is worth and what’s already owed on it.
| Step | What happens |
|---|---|
| 1. Estimate | You give a rough value and the balance of any existing loan |
| 2. Lender limit | The lender applies its maximum loan-to-value ratio for that property type |
| 3. Valuation | A valuer confirms the figure |
| 4. Available amount | Lender’s limit minus existing debt = what the property can support |
Lenders treat property types differently. A suburban house, a regional shopfront and a specialised industrial site won’t be viewed the same way. That’s why we ask for the address and type on the call.
Your move: not sure how much equity you’ve got? Give us your best estimate and what’s owed. Start the 60-second enquiry and we’ll work it out together, with no credit check to enquire.
Who has to agree?
This is where owners get caught out. If the property is jointly owned, every owner on the title usually has to consent and sign, even if they have nothing to do with the business. Lenders often want non-borrowing owners to get independent legal advice first.
Common ownership setups:
- Joint names with a spouse or partner: both sign.
- A family trust: the trustee signs, and the trust deed needs to allow it.
- A company: company-owned property can often be used, with the directors’ approval and the right paperwork.
- Parents’ property: possible as third-party security, but it’s a big ask and needs careful advice.
Business.gov.au’s guide to business structures is a handy refresher on how sole traders, companies and trusts differ.
Why use property rather than going unsecured?
- Size: property opens far larger amounts than turnover alone.
- Flexibility: past credit issues, ATO debt and newer ABNs are easier to work through.
- Structure: some loans allow lighter repayments during the term, with the principal repaid at the end.
The Reserve Bank’s October 2025 bulletin found residential property remains a favoured form of security for small business lending. Lenders like it, so it carries weight.
Repayment reality check (illustrative)
Invented example: a business borrows $250,000 against an investment property to fit out a second location, with a quoted total cost of finance of $45,000 over 36 months. Monthly turnover is $90,000.
| Style | Monthly repayment | Share of turnover | End of term |
|---|---|---|---|
| Spread evenly | $8,194 | 9.1% | Nothing owing |
| Cost during term, principal at end | $1,250 | 1.4% | $250,000 due |
The second style looks easy until month 36. Unless the new site is throwing off cash or a refinance is lined up, the first style is often the safer choice. Test both in the repayment planner.
What our expert will ask you on the call
- Which property, who owns it and what’s it roughly worth?
- What’s owed on it now, and with whom?
- Has everyone on the title agreed in principle?
- What’s the business purpose and the timeline?
- How will the loan be repaid: from trading, a sale or a refinance?
Risks worth saying out loud
If the loan isn’t repaid, the lender can enforce its security. That’s why we push so hard on repayments you can carry. Before you commit, run a bad-month scenario, check you could cover a slow quarter, and make sure the purpose genuinely improves the business. Our guide to borrowing to grow has a simple payback test.
Home, investment or commercial: does the property type matter?
Yes. Lenders look at how easily a property could be sold and what it would fetch, so each type is viewed a little differently:
| Property type | How lenders tend to see it |
|---|---|
| Suburban house | Widely accepted, straightforward to value |
| Inner-city unit | Usually fine; very small or high-density units can be treated more cautiously |
| Investment property with a tenant | Accepted; the lease details may be asked for |
| Shopfront or office | Accepted by many; location and vacancy matter |
| Industrial or specialised site | Case by case; specialist uses can limit the amount |
| Rural or vacant land | Case by case; size, access and use count |
Your expert will tell you on the call how the property you have in mind is likely to be treated, before anyone orders a valuation.
Unlock it properly
Equity is a tool, not free money. Used with a clear purpose and a repayment you can live with, a property-backed business loan can do more for a business than almost anything else.
When you’re ready, take step 1 here. No credit check to enquire, no blasting your details out to lenders, and a real expert on the other end of the phone. Please include the property details and what’s owed as accurately as you can. It saves a round of back-and-forth and gets you to the right option faster.
Frequently asked questions
Can I use my family home for a business loan?
Yes, a home is often used as security for a business loan. All owners on the title normally need to agree and sign, and the money must be used for business purposes. Weigh the risk carefully and get independent advice if you're unsure.
Can I use an investment property instead of my home?
Yes. Investment properties and commercial premises can also secure a business loan, and some owners prefer to keep the family home out of it if there's enough equity elsewhere.
What if my partner owns half the house but isn't in the business?
They'll usually need to consent to the security and sign the mortgage documents, and lenders commonly ask them to get independent legal advice. Talk to them early so there are no surprises.
Do I need a valuation?
Usually, yes. The lender orders a valuation to confirm what the property is worth. Your own estimate gets the conversation started; the valuation sets the figure the loan is based on.
Does the property have to be in the business's name?
No. The property can be owned by you personally, a family trust or another entity, as long as the owners agree to provide it as security for the business loan.