Borrowing for business against property, explained
There are two different business lending markets in Australia, and which one you are in is decided by a single question: is there property behind the deal? This page explains what property security actually does, because most borrowers only ever see the expensive market.
What the security changes
As a working rule, non-property-backed business lending prices around 9% to 13% p.a. Property-backed deals price around 6% to 9%: single digits, in the same territory as investor home lending, because the lender's risk sits on the property rather than on your trading figures. The security does not just move the rate. It widens the lender panel, lifts the ceiling, facilities run to $5 million and beyond against property, softens documentation requirements, and shortens the questions asked about your business.
No ABN history required, literally
This is the part that surprises new business owners: with sufficient property equity, lenders will fund a business with no trading history at all. A brand new ABN that would be declined or priced brutally for an unsecured loan can borrow at the property-backed band, because the deal stands on the equity, not the trading history. If you own property and are starting or buying a business, you are a stronger borrower than you think.
What counts as security
Residential, commercial and investment property all qualify, and the property does not need to be owned outright: lenders look at the equity position, so a home with an existing mortgage can still back a facility through a second mortgage structure. What you can fund with it: equipment and fitouts, business purchases, working capital, and consolidating ATO debt, which is generally only fundable with property behind it.
The honest trade-off
The property is genuinely at risk if the business fails; that is what the cheaper rate is buying. Size the borrowing to what the business plan survives, not to what the equity allows, and remember this is business-purpose commercial credit: consumer credit protections do not apply. The structure rewards borrowers who treat the equity as a tool, not a jackpot.
Getting a number
A $500,000 property-backed facility at 7.5% over 10 years runs about $1,370 a week; the same money unsecured, where it is available at all, costs hundreds more per week. Tell us the property position and the purpose and we will place it properly: start at property-backed finance, or read the new-ABN guide if the business is young.
Frequently asked questions
Can I really get business finance at home loan style rates?
With property security, commercial deals price around 6% to 9% p.a. as a working rule, which overlaps investor home lending territory. Without property, business lending runs 9% to 13% or more.
Do I need trading history for a property-backed business loan?
Often no. With sufficient equity the deal stands on the property, so new ABNs and businesses without financials are regularly funded at the secured band.
Does my property need to be paid off?
No. Lenders look at the equity position, and a property with an existing mortgage can back a facility through a second mortgage structure.
How much can I borrow against property for business?
Property-backed facilities run to $5 million and beyond, sized to the equity and the purpose rather than to trading history.
Tell us the property position, we do the rest
The equity does the heavy lifting: purpose, property and payout, and we will come back with the real rate, usually within a day.
This article is general information only and not financial, credit, or tax advice. Ventas Asset Lending is a finance broker, not a lender. Approvals are subject to lender assessment. Consider your own circumstances and speak to a qualified professional, including your accountant for any tax questions.