Who lends against property for business purposes?

Property is the backbone of Australian small business lending. The Reserve Bank’s October 2025 Bulletin found that around half of small SME loans are secured by assets other than residential property, with the rest secured by residential property — and that new loans secured by residential property are on average about four and a half times the size of other secured loans. Put simply, if you have property, you have options, and bigger ones.

The real question is which lender type to use it with.

Which lenders take property as business security?

Lender type	Position	Typical term	Best for
Major and regional banks	First mortgage	Long	Established, documented businesses with clean credit
Non-bank lenders	First mortgage	Medium to long	Sound businesses with untidy paperwork or past credit issues
Private lenders	First or second	Short	Urgent or time-limited needs with a clear exit
Caveat and second-mortgage lenders	Second or caveat	Short	Leaving an existing home loan untouched

How do you choose between them?

Start with three questions:

1. How long do you need the money? Months points towards private or second-position lending; years points towards a bank or non-bank first mortgage.
2. How complete is your paperwork? Lodged financials and clean credit open the banks. Otherwise, non-bank and private lenders.
3. Do you want to keep your existing home loan? If yes, second position. If you’re happy to refinance it, a new first mortgage may be cheaper overall.

The Lender Matcher works through these questions for you in under a minute.

What can property-backed business loans be used for?

Almost any genuine business purpose: working capital, buying equipment or stock, paying an ATO debt, buying a business, funding a fit-out or expansion, refinancing expensive short-term debt, or bridging until a sale or receivable settles. What they can’t be used for is personal spending — business lenders will ask for the purpose and may require a business purpose declaration.

What will the lender check?

• Valuation. The lender orders its own; your estimate is a starting point only.
• Existing debt. A recent statement for any current mortgage.
• Ownership and consent. All registered owners must agree; company or trust borrowers usually need director or trustee guarantees.
• Purpose and repayment. Banks focus on serviceability from business income; private lenders focus more on the exit.
• Credit and tax position. Weighted differently by each lender type.

Want a rough sense of what your equity could support before you commit to anything? Send a quick enquiry — asking doesn’t involve a credit check.

What risks should you weigh?

Using property, especially the family home, raises the stakes. If the business can’t repay, the lender can enforce its security. Keep the loan sized to the need rather than the maximum available, make sure the term matches the purpose, and have a realistic plan for repayment. Guarantors should get independent legal advice. Business-purpose loans sit outside the National Credit Act, so read the contract closely and ask questions about anything unclear.

Why are property-backed applications declined?

• Not enough equity after existing debt and the lender’s limits.
• Property type or location outside the lender’s policy.
• No convincing way to repay, particularly for short-term loans.
• A co-owner who won’t consent.
• Arrears on the existing mortgage.

First mortgage or second position?

Question	Refinance to a new first mortgage	Borrow in second position
Keep your existing home loan?	No	Yes
Typical term	Longer	Shorter
Relative cost	Generally lower	Generally higher
Paperwork and time	More	Less
Best when	The need is long-term	The need is short and has a clear end

An illustrative example

Purely illustrative, with no real business involved: a café owner wants to fit out a second site. She owns her home with a modest mortgage and has two years of lodged financials. Because the need is long-term, a non-bank lender refinances her home loan into a larger first mortgage covering both the existing debt and the fit-out, with repayments spread over a long term. Had she only needed a few months of funding before a property settlement, a second-position loan behind her existing home loan would have been the simpler choice.

Which questions should you ask before using property?

• What’s the realistic value, and what will the lender’s valuation likely say?
• Which loan-to-value limit applies to this property type and location?
• Is it a first mortgage, second mortgage or caveat?
• What happens if the business can’t repay on time?
• Do all owners understand and agree to the arrangement?

Quick checklist before you apply

• Property addresses, estimated values and mortgage statements.
• Consent from every registered owner.
• The business purpose and amount.
• Financials or alternative income evidence, depending on lender type.

One more consideration is timing. A property-secured loan needs a valuation and legal work, so allow for those steps even with the more flexible lender types. If the need is urgent, say so at the start; lenders that specialise in short-term property lending can sometimes prioritise.

Have equity and a business need?

If you own property and need business funds, there’s very likely a lender type that will help. Send a 60-second enquiry with the property, the amount and the purpose, and a lending specialist will tell you whether a bank, a non-bank, a private lender or a second-position loan fits best. No credit check to ask, no scattering your details across the market, and accurate answers mean we can size and match the loan properly first time.