Quick answer
A secured business loan uses property — residential or commercial — as security for money borrowed for a business purpose. Because the lender relies on equity, amounts from $20k to $5m are possible and credit history, trading time and paperwork carry less weight. It can be set up as a first mortgage, a second mortgage or, over Victorian property, a caveat.
Key points
- Property-secured business loans run from $20k to $5m.
- Residential or commercial property can be used, owned by the business or its owners.
- Equity carries much of the decision, so past credit issues and new businesses can still qualify.
- Structured as a first mortgage, second mortgage or (in Victoria) a caveat.
- Amounts
- $20k – $5m
- Security
- Residential or commercial property
- Structures
- First mortgage, second mortgage, caveat (VIC)
If unsecured lending is the nimble hatchback of business finance, secured lending is the truck. It carries bigger loads, handles rougher roads and doesn’t mind a few dents in the paintwork — because property equity is doing the heavy lifting.
What is a secured business loan?
It’s a loan for a business purpose where the lender takes security over property. If the loan isn’t repaid, the lender can rely on that property to recover what it’s owed. In exchange for that comfort, lenders can offer much larger amounts and look past things that would sink an unsecured application.
In our group, property-secured business loans run from $20k to $5m. The security can be residential (a home, a unit, an investment property) or commercial (an office, shop, factory or warehouse). It doesn’t have to be owned by the business; directors and other willing owners can provide it.
There are three main ways the security is registered:
- First mortgage — the lender is the primary mortgagee. Often used to refinance an existing mortgage and release equity at the same time.
- Second mortgage — the lender sits behind an existing first mortgage. Your home loan stays exactly as it is.
- Caveat — a caveat is lodged on the title. In our group this is a Victorian option; elsewhere a second mortgage does the same job.
Who suits a secured business loan?
The RBA’s 2025 review of small business conditions found that collateral requirements remain one of the biggest hurdles owners report. Flip that around and it’s good news for anyone with equity: you already hold the thing lenders want most. Secured loans tend to suit:
- Larger amounts beyond what turnover alone supports
- Newer businesses without two years of financials — see start-up business loans
- Owners with past credit issues or an ATO debt to clear
- Time-sensitive deals where paperwork for an unsecured loan would take too long
- Big-ticket plans like buying a business, expanding premises or consolidating debts
How does a secured business loan work, step by step?
- Enquiry. You share the amount, purpose and property details. No credit check yet.
- Equity check. The lender estimates the property’s value and subtracts any existing mortgage to see how much equity is available. This gives a rough loan-to-value ratio (LVR).
- Purpose and exit. For short-term loans, the lender wants to know how the loan will be repaid — from trading, a sale or a refinance.
- Offer and valuation. An indicative offer is issued and a formal valuation ordered.
- Legal documents. Mortgage (or caveat) documents, guarantees and loan contracts are prepared and signed. Every property owner signs.
- Settlement. The security is registered and funds are paid to you, your supplier, the ATO or whoever needs paying.
What are the pros and cons?
| Pros | Cons |
|---|---|
| Largest amounts — $20k to $5m | Property is at risk if the loan isn’t repaid |
| Credit history and trading time weigh less | Valuation and legal steps add time and cost |
| Longer terms are possible for bigger projects | All property owners must agree and sign |
| Works for start-ups and businesses that have had a rough patch | Equity used for one loan isn’t available for another |
| Residential or commercial security accepted | Short-term versions need a clear exit plan |
The biggest risk is borrowing more than the plan can carry. A good lending specialist will push back if the numbers don’t stack up — that’s a feature, not a bug. If you want that honest view, ask us what’s possible.
How does equity turn into a loan? (illustrative)
Here’s a simplified example to show the moving parts. Imagine a warehouse owned by a wholesaler, valued at about $1.6m, with an existing mortgage of $500k. The business wants to buy a competitor’s customer list and stock.
- The lender looks at the value, the existing debt and its own maximum loan-to-value ratio for that type of property.
- The gap between what’s already owed and that maximum is the borrowing room.
- The lender then checks the purpose and how the loan will be repaid — from the extra trading the acquisition brings, or a refinance later.
The owners could refinance the whole warehouse as a first mortgage, or leave the current loan alone and add a second mortgage behind it. Which one wins depends on the existing loan’s terms, the size of the new borrowing and how long it’s needed for. This is purely illustrative; real figures depend on valuation and assessment.
What documents do you need?
- Photo ID for every borrower, guarantor and property owner
- ABN or ACN details
- Property details: address, a recent rates notice, and current mortgage statements for any existing loan
- Recent business bank statements, and BAS or financials for larger or longer loans
- A short explanation of the purpose and, for short-term loans, the exit (a contract of sale, refinance plan or expected funds)
What are the alternatives?
If you don’t want property involved, look at unsecured business loans, a line of credit or invoice finance. If the money is buying an asset, equipment finance secures the loan with the asset itself. And if you only need a short bridge until a sale settles, a bridging loan may be a cleaner fit.
Could your property equity fund your next big move?
Equity sitting in a property can be the difference between “one day” and “this quarter”. We’ll tell you straight whether a secured loan makes sense, which structure suits your state and situation, and what it would take.
Enquiring won’t touch your credit file, your details aren’t shopped around to a parade of lenders, and the person who reads your form is the person who calls you. Give us accurate answers on the amount, the property and its existing mortgage, and we can do the maths properly on the first call. Start your enquiry here.
Frequently asked questions
What can be used as security for a secured business loan?
Residential property such as a home or investment property, or commercial property such as a factory, office, shop or warehouse. The property can be owned by the business, its directors or another party who agrees to provide security and signs the documents.
How much can I borrow against my property for business?
It depends on the property's value, any existing mortgage and how much equity remains. Lenders express this as a loan-to-value ratio (LVR). Amounts from $20k to $5m are possible depending on equity and the overall picture.
Can I get a secured business loan with bad credit?
Often, yes. Because the lender is relying on property equity, past defaults or a messy credit file are looked at case by case and are less likely to be a deal-breaker than with unsecured lending.
Do I need to refinance my home loan to get a secured business loan?
Not necessarily. A second mortgage sits behind your existing home loan, so you can borrow against spare equity without touching the first mortgage.
What happens if I can't repay a secured business loan?
The lender can ultimately enforce its security, which may mean selling the property. That's why it's important to have a realistic repayment plan or exit — and to talk to the lender early if things change.