Quick answer
A complex structure business loan is one where the borrower, the security owner and the guarantors aren't all the same entity, such as a trading trust with a corporate trustee and property held in a separate company. Specialist lenders work with the structure you have. They confirm each entity's power to borrow or give security, map how money flows between them, and take guarantees from the people who control the group.
Key points
- Banks often decline complex structures because they don't fit a standard application.
- Specialist lenders work out the right borrower, security provider and guarantors.
- A one-page structure diagram saves weeks of back-and-forth.
- You usually don't need to restructure before borrowing.
- Structures
- Trusts, companies, groups
- Property-secured
- $20k to $5m
- Restructure first?
- Usually not needed
Some of the most successful businesses we see are also the hardest to fit on a bank form. A family trust runs the business, with a company as trustee. A second company owns the warehouse. A unit trust holds an investment property. The founders own shares through yet another entity for good tax and succession reasons. Every part makes sense to the accountant who set it up. To a bank’s application system, it’s a mess.
So the bank declines, not because the business is weak, but because untangling it takes time the process isn’t built for.
Why do complex structures get declined?
Standard bank lending assumes one borrower, one set of financials and one owner of the security. When those split across several entities, the bank has to answer questions its checklist doesn’t ask:
- Which entity is actually borrowing, and does it have the income to repay?
- Does the entity that owns the property have the power to mortgage it for someone else’s debt?
- Where a trust is involved, does the trust deed allow the trustee to borrow, give security or guarantee?
- How does money move between the entities, and could it move away from the lender’s reach?
Each question is answerable. It’s just that many banks would rather decline than answer them for a mid-sized loan.
How do specialist lenders approach a complex structure?
They start by mapping it. Then they assign three roles:
| Role | Who usually fills it | What the lender checks |
|---|---|---|
| Borrower | The entity that uses the funds and earns the income | Bank statements, financials, purpose |
| Security provider | Whichever entity owns the property | Title, value, power to give security (the trust deed, if a trust) |
| Guarantors | Directors and the people who control the group | Credit history, assets and liabilities |
Sometimes lenders also take security over business assets through a general security agreement, which is registered on the Personal Property Securities Register. Cross-guarantees between group entities are common, too.
The result is a loan built around your structure, not a demand that you rebuild the structure around the loan. Property-secured business loans run from $20,000 to $5,000,000 as first mortgages, second mortgages or caveat loans. Unsecured and cash-flow options, typically $5,000 to $500,000, are sized on the trading entity’s turnover and bank statements.
To see how your structure might be assessed, start a 60-second enquiry. There’s no credit check when you first enquire.
What should I prepare?
A little preparation goes a long way with complex files:
- A one-page diagram. Every entity, who owns or controls it, which one trades, which one holds property. Hand-drawn is fine.
- Trust deeds, including any variations, for every trust involved. The ATO explains that trustees must deal with trust property in line with the deed, which is why lenders read it. Our trust deed borrowing checklist covers what they look for.
- Company extracts showing directors and shareholders.
- Bank statements for the borrowing entity and any entity that regularly moves money to or from it.
- Recent financials for the main entities, or an explanation if they’re behind.
- Details of every property that might be offered: owner, value, what’s owing.
Do I need to restructure before borrowing?
Usually not. Restructuring can trigger stamp duty, capital gains tax and legal costs, and it takes time. Specialist lenders generally prefer to lend to the structure as it stands, as long as each entity has the right powers and the right people sign. If your accountant is already planning a restructure for other reasons, tell the lender early so the loan can fit the new shape.
What kinds of complex files do lenders see most?
- Trading trust with a corporate trustee. Very common. See business loans for trusts.
- Operating company plus property company. The property company gives security for the operating company’s loan. See loans for groups of companies.
- Business owned by one person, property owned by a spouse or parent. The property owner provides security and guarantees. See using a related party’s property.
- Partnership of companies or trusts. Each partner entity’s powers and guarantees need checking.
Illustrative example: three entities, one loan
Illustrative only, not a real client. A freight business in Melbourne’s west runs through a discretionary trust with a company as trustee. The depot is owned by a separate company controlled by the same two directors, and each director holds a home in their own name. The business needs funds to pay out an equipment lender and buy two prime movers.
The bank declines after weeks of requests for more information. A specialist lender lends to the trustee company, takes a mortgage over the depot from the property company, confirms the trust deed allows the borrowing, and takes guarantees from both directors. No restructure is needed.
Your structure made sense to your accountant. We’ll make it make sense to a lender.
Trusts, groups and cross-guarantees don’t faze us. Sketch your setup in the enquiry, which takes about a minute and involves no credit check when you first enquire. It goes to one specialist rather than a panel of lenders, and they’ll call to map the structure with you.
Please describe the structure accurately, including which entity owns what. It’s the fastest way to the right lender. See if you qualify →
Frequently asked questions
Which entity should be the borrower in a group structure?
Usually the entity that uses the funds and earns the income to repay them, often the trading company or trustee of the trading trust. The lender may then take security from the entity that owns the property and guarantees from the directors.
Do lenders need to see the trust deed?
Yes, for any trust that borrows, gives security or guarantees. The deed confirms who the trustee is and whether it has the power to do those things. Keep a copy of the deed and any variations handy.
Will every director have to guarantee the loan?
Commonly, the directors and main controllers of the borrowing and security-providing entities are asked to guarantee. The exact requirement depends on the lender and the structure.
Can a self-managed super fund's property be used as security for a business loan?
Super fund assets are subject to strict rules, so they're rarely a realistic option as security for a business loan. Check with your SMSF adviser before assuming otherwise, and plan around other security.
Does a complex structure make the loan more expensive?
It can add legal work, because more entities mean more documents. The underlying pricing depends on the security, credit history, amount and term, like any other loan.