How to Secure a Business Loan in Australia Using Property as Security

Access to funding remains one of the biggest challenges facing Australian small and medium businesses. With traditional banks becoming increasingly conservative in their lending, many business owners are turning to alternative finance options, particularly loans secured by property.

At Innovate Funding, we help business owners unlock equity in real estate to access the capital they need, whether through a first mortgage or a second mortgage, to fund business growth, solve cash flow issues, or take advantage of time-sensitive opportunities.

In this article, we’ll explain how secured business loans work, share real client scenarios, and outline what’s needed to qualify. If you’re an Australian business owner with access to property, this may be one of the most effective ways to access funding.

What Is a Secured Business Loan?

A secured business loan is a loan backed by an asset, most commonly real estate. In private lending, the two most common types of secured loans are:

• First Mortgage: The lender has the primary claim over the property. Suitable when the property is unencumbered or when refinancing an existing facility.

• Second Mortgage: The lender has a secondary claim, typically behind an existing home or commercial loan. Ideal for accessing equity without disrupting your existing finance.

These loans offer flexibility, faster turnaround times, and fewer hurdles compared to traditional banks. They are well-suited to business owners seeking practical funding solutions.

Real Client Scenarios: Unlocking Equity for Business Growth

To provide a practical understanding, here are three examples where Innovate Funding has assisted clients in accessing business loans secured by property.

1. Retailer Accesses $250,000 Through a Second Mortgage

• Business Type: Homewares retailer based in Sydney

• Loan Type: Second mortgage over owner-occupied residential property

• Loan Amount: $250,000

• Purpose: Stock purchase and product line expansion

• Result: Online sales revenue doubled within six months

The client had significant equity in their home but was unable to secure funding through their bank due to inconsistent seasonal income. We arranged a second mortgage facility that allowed them to capitalise on seasonal demand and increase inventory.

2. Builder Secures $400,000 via First Mortgage for Growth Capital

• Business Type: Construction company based in Melbourne

• Loan Type: First mortgage over investment property

• Loan Amount: $400,000

• Purpose: Purchase of new equipment and hiring additional staff

• Result: Business scaled to take on larger contracts, increasing turnover by 35%

Although trading for under two years, the builder had an unencumbered residential investment property. The bank considered the business too young. We assessed the asset, business activity, and pipeline and delivered funding in under one week.

3. Hospitality Operator Uses $150,000 Second Mortgage to Fund Renovations

• Business Type: Multi-site café group in Brisbane

• Loan Type: Second mortgage over residential property held by the director

• Loan Amount: $150,000

• Purpose: Renovation, rebranding, and marketing

• Result: Increased brand recognition and customer traffic across all sites

The business was performing well post-pandemic but had been declined by traditional lenders. We provided a second mortgage loan that enabled a comprehensive rebrand and fit-out.

Common Uses of Business Loans Secured by Property

Secured loans offer broad flexibility in how funds can be used. Some common purposes include:

• Purchasing inventory or materials

• Acquiring new equipment or vehicles

• Hiring staff or contractors

• Marketing, advertising, and digital campaigns

• Renovating premises or launching new locations

• Paying off ATO debt or tax liabilities

• Managing payroll and supplier obligations

• Covering cash flow during seasonal downturns

• Business acquisition or partnership buyouts

• Bridging finance for business transitions

This versatility is one of the reasons many business owners prefer secured private lending options over traditional loans.

Eligibility Criteria for Secured Business Loans

While private lending offers more flexibility than bank finance, certain requirements still apply.

Property Security

You must have access to real estate that can be offered as security. This can include:

• Owner-occupied residential property

• Investment property

• Commercial or industrial property

• Property held in a director’s name or related entity

We can assist with both first and second mortgage placements, depending on your current finance position and the equity available.

Business Trading History

Generally, we require that businesses are:

• Trading for at least 12 months

• Registered for GST

This allows us to verify income and assess business activity. However, if your business has been operating for less than 12 months or is not yet GST registered, we can still consider your application with the support of additional documentation.

Accountant’s Letter for Early-Stage Businesses

For early-stage businesses or applicants who are not yet GST registered, an accountant’s letter is typically required. This letter should outline:

• The nature of the business and trading activity

• Confirmation of expected income

• A breakdown of how the loan funds will be used

• An assessment of the business’s viability

This information helps provide clarity and confidence in the lending decision, particularly for start-ups or businesses in transition.

Our Approval Process

At Innovate Funding, we streamline the application and approval process to deliver outcomes quickly. Here is a typical overview:

1. Initial Discussion: We assess your funding needs and the available property security

2. Valuation Ordered: In most cases, we arrange an independent property valuation

3. Offer Issued: A formal loan offer is provided, detailing terms and conditions

4. Documentation: Submission of ID, ABN or GST details, financials, or an accountant’s letter

5. Settlement: Once documents are signed, funds are released, typically within three to five business days

We prioritise transparency and clear communication throughout the process.

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Why Choose Innovate Funding?

At Innovate Funding, we specialise in non-bank commercial lending and provide tailored solutions for Australian SMEs who need fast and flexible funding. Our clients value:

• A personalised, solution-oriented approach

• Rapid decision-making and turnaround

• Access to first and second mortgage options

• A clear understanding of commercial needs

• National lending capabilities

We understand the unique pressures of running a business and focus on helping you access funding when it matters most.

Final Thoughts

Securing a business loan using property as collateral can be one of the most efficient and strategic ways to access funding. Whether you are a growing business looking to invest or simply need a short-term capital injection, leveraging the equity in property can open up a wide range of opportunities.

If you have access to property and need business funding, Innovate Funding is here to help. Our experience in first and second mortgage loans ensures a smooth, fast, and outcome-focused process tailored to your goals.

Contact us today to explore how we can support your business with the capital it needs.