Quick answer
Banks keep a preferred list of property types they'll lend against, and vacant land, rural blocks, specialised commercial buildings and property in small towns often fall outside it. Specialist and private lenders value each property on its merits, then adjust how much they lend and for how long. The loan is still possible; it's the amount and structure that change with the security.
Key points
- Unusual security is about how easily the lender could sell, not whether it has value.
- Specialist lenders value unusual property individually.
- Expect a more conservative loan amount than for a suburban house.
- Combining unusual security with a second property can lift what's possible.
- Property-secured
- $20k to $5m
- Loan types
- First, second, caveat
- Valuation
- Property-by-property
You own something valuable, but the bank won’t take it. Maybe it’s a block of land you’ve held for years, a rural property outside town, a building fitted out for one specific trade, or a shop in a small regional centre. The bank’s answer: not on our list.
That’s a statement about the bank’s policy, not about the property. Specialist lenders keep a much wider view of what can secure a business loan.
Why do banks reject some property as security?
A lender’s real question about security is simple: if we ever had to sell this, how easily, how quickly and for how much? Banks answer it with a preferred list, typically favouring houses and units in established areas and standard commercial property in larger centres. Anything that’s slower or harder to sell, or has fewer likely buyers, can fall outside the list.
The Reserve Bank’s October 2025 Bulletin noted that collateral requirements remain one of the main barriers small businesses report, and that around half of small loans to small and medium businesses are secured with assets other than residential property. There’s more variety in business security than a bank’s list suggests.
Which types of property count as unusual?
| Property type | Why banks hesitate | What specialist lenders look at |
|---|---|---|
| Vacant land | No income, fewer buyers, possible holding costs | Zoning, access, services, location, sale evidence nearby |
| Rural and rural-residential | Size, distance from town, seasonal markets | Improvements, water, access, comparable sales |
| Specialised commercial | Built for one use, costly to convert | Current use, lease, value to another operator |
| Small-town commercial | Thin buyer pool | Local demand, tenancy, condition |
| Mixed-use and shop-top | Unusual combination of residential and commercial | Each component’s value, tenancy |
| Property with title quirks | Easements, unusual strata, company title | Legal detail, marketability |
How does unusual security change the loan?
Mostly in amount and term, rather than whether a loan is possible at all. A specialist lender will typically:
- Get a valuation from a valuer who knows the property type and area.
- Lend a more conservative proportion of the value than for a suburban house.
- Favour shorter terms with a clear exit, such as a sale, a refinance or strong cash flow.
- Look for extra support, such as a second property or guarantees, for larger amounts.
Property-secured business loans run from $20,000 to $5,000,000 as first mortgages, second mortgages or caveat loans. If there’s already a bank loan over the property, a second mortgage behind it or a caveat loan may work without refinancing the bank.
To find out whether your property could support a loan, start a 60-second enquiry. There’s no credit check when you first enquire.
What details will a lender ask for?
- The address and title details, and who owns it.
- What it’s used for now and how it’s zoned.
- Any existing loan and its balance.
- A recent valuation or rates notice, if you have one.
- Any leases or tenants.
- Access, services and any known issues, such as flooding or easements.
- Any recent sales of similar property nearby that you know of. Local agents are often a good source.
The more you can tell the lender up front, the more accurately it can size the loan before paying for a valuation.
Can property owned by someone else help?
Yes. If a family member, a family trust or a related company owns more conventional property, adding it to the security can lift what’s possible. Our page on using a related party’s property explains how that works and what it asks of the owner.
Illustrative example: land in the south-west
Illustrative only, not a real client. A civil earthworks contractor in regional Western Australia owns a large vacant block zoned rural near a growing town. The company needs to clear an ATO balance and fund a new excavator. The bank won’t lend against vacant rural land.
A specialist lender commissions a local valuation, takes a first mortgage over the block and a second mortgage over the director’s home in town, pays the ATO at settlement and funds the excavator deposit. The plan is to refinance once the director subdivides and sells part of the block.
Does unusual security cost more?
It can, because the lender is accepting property that’s harder to sell and will price for that. How much more depends on the property, the amount, the term and the rest of the file. There are ways to improve the picture: offering a second, more conventional property alongside, choosing a shorter term with a firm exit, or reducing the amount so the loan sits comfortably within the valuation. We’ll talk through those levers on the first call rather than leaving you to guess.
The bank didn’t like the property. Let’s ask someone who might.
Unusual security is exactly the kind of file we’re built for. Describe the property in a one-minute enquiry, with no credit check when you first enquire. Your details aren’t fired off to a list of lenders, and a specialist who knows how these properties get valued will call you.
Please describe the property accurately, including zoning and anything unusual about the title. It saves time and helps us match the right lender first. See if you qualify →
Frequently asked questions
Can I get a business loan secured on vacant land?
Often, yes, with a specialist lender. Vacant land usually supports a smaller loan relative to its value than a house would, and lenders look closely at zoning, access, location and how quickly it could be sold.
Will lenders accept a rural property or farm as security?
Some will, depending on the size, location, improvements and use. Lenders tend to be more comfortable with smaller rural-residential holdings than with large working farms.
What counts as a specialised commercial property?
A building designed for one use that's hard to convert, such as a service station, childcare centre, hotel, car wash or cold store. Lenders value it on its current use and on what it would be worth to another buyer.
Can I combine two properties to reach the amount I need?
Yes, lenders can take security over more than one property. Pairing an unusual property with a more conventional one often increases what's possible.