Using property equity to steady a struggling business

When a business is under pressure, the owner’s property is often the biggest asset in the picture: a home with years of repayments behind it, an investment unit, or the building the business operates from. Using that equity can feel like a big step, and it is. It’s also, for many owners, the single most effective way to clear the pressure and keep trading.

This page is about using it well.

Why is property equity so powerful for difficult files?

Because it shifts the lender’s attention. With good security, a specialist lender’s main questions become: what’s the property worth, what’s owing on it, and how will this loan be repaid? Credit history, a loss year, overdue lodgements and ATO debt still get looked at, but they rarely decide the outcome alone.

The Reserve Bank’s October 2025 Bulletin found that new small business loans secured with residential property are, on average, four and a half times as large as those secured by other means. Property changes what’s possible, in size and in flexibility.

What can one property-secured loan clear?

At settlement, the lender can pay several parties directly:

Paid out at settlement	What it stops
ATO arrears	General interest charge on that balance, collection action, director penalty exposure
Pressing suppliers	Stop-supply, cash-on-delivery terms, legal demands
Stacked short-term loans and advances	Daily and weekly deductions
Judgments	Enforcement risk
Existing first mortgage, if refinanced	Multiple lenders on one property

Property-secured business loans run from $20,000 to $5,000,000 as first mortgages, second mortgages behind your bank, or caveat loans. For keeping an existing home loan in place, see second mortgages behind your bank. For short, defined needs, see caveat loans.

To check what your equity could do, start a 60-second enquiry. There’s no credit check when you first enquire.

What honest questions should I ask first?

Using property to support a business is a serious decision. Before going ahead, be able to answer yes to these:

1. Does the business make money at its core? Remove the one-off hits. If it still loses money, equity only delays the problem, and puts the property at risk too.
2. Will clearing these debts actually fix the pressure? Or is there a deeper cash-flow problem that will rebuild the same debts?
3. Is the repayment plan realistic? A refinance, a sale, or cash flow that clearly covers repayments with room to spare.
4. Does everyone with an interest in the property understand? A co-owner, spouse or family trust needs to be fully on board.
5. Is the company still able to pay its debts as they fall due, or is this part of an advised plan? ASIC’s guidance on insolvent companies tells directors not to incur further debt once a company is insolvent and to get advice early.

If any answer is shaky, talk to your accountant first. We’ll also tell you plainly if we think equity isn’t the right tool.

Why does timing matter with ATO debt?

Director penalties are a good example. Under the ATO’s director penalty rules, directors can become personally liable for unpaid PAYG withholding, GST and super guarantee charge. Once a notice is issued there are 21 days to act, and where amounts were reported more than three months late, paying in full is the only way to have the penalty remitted. At that point, the choice is often between a loan secured on property and a personal liability that could reach the same property anyway. Our page on ATO debt covers this in more detail.

Illustrative example: equity, used carefully

Illustrative only, not a real client. A family-owned bakery business in Geelong built up ATO arrears and supplier debts after a year of sharply higher ingredient and energy costs. Prices have since been adjusted, and the last six months show a healthy margin. The owners’ home has substantial equity above a modest home loan.

A specialist lender provides a second mortgage behind the home loan, paying the ATO and two major suppliers at settlement. The owners and their accountant set a plan to refinance to a lower-cost facility within two years, once lodgements and trading show a full clean year.

How long should a property-secured rescue loan run?

Long enough to fix the problem, and no longer than it needs to be. Many rescue loans are deliberately short, with a clear plan to refinance to cheaper finance once the business’s lodgements, credit file and trading have had time to recover. Others run longer where the business needs time to rebuild. The right term is the one your cash flow can carry comfortably while leaving room for the unexpected. If stacked short-term loans are part of the pressure, see refinancing expensive debt for how they’re folded in.

Your equity, your decision. Let’s make it a well-informed one.

We’ll show you what your property could do for the business, and we’ll be straight if it’s not the right move. The enquiry takes a minute, with no credit check when you first enquire. Your details stay with our team instead of being scattered to lenders, and a person who knows secured lending calls you.

Please give us an honest estimate of the property’s value, what’s owing on it and what the business owes. It’s the only way to give you an answer you can rely on. See if you qualify →