If you’re a homeowner looking to raise capital, property secured business finance could be the ideal funding solution. 

You can unlock the value tied up in your home to grow your business or get funding to purchase or refinance a residential property. 

Offering property security can increase your chances of being approved for finance. It can also help you access competitive rates and longer terms compared to other types of secured funding. 

In this guide, we’ll explore the different types of property secured business finance. 

You’ll learn how they work, who they’re for, and how to apply. 

What Is Property Secured Business Finance?

Property secured business finance is an umbrella term for the financing solutions that use property as security. The amount of funding you can access is determined by the value of the property you use as collateral. It includes business loans, home loans, secured working capital solutions, and credit facilities.

What Can Property Secured Business Finance Be Used For?

Property Secured Finance can be used to purchase or refinance a home or for funding any business purpose. It can provide a cash flow boost to cover unexpected costs, raise capital for expansion, or long term financing to help your business grow.

There are several types of property secured finance. Let’s take a closer look at each solution.

5 Types of Property Secured Business Finance

1. Home Loan for Business Owners

Home Loan for Business Owners is a funding solution that allows you to unlock the value of the extra equity tied up in your residential property through refinancing. It can also be used as a funding solution to help you purchase a new home. 

Unlike a traditional mortgage, a Home Loan for Business Owners can provide fast funding. There’s minimal paperwork required, and you can receive conditional approval in as little as 48 hours. 

In 2021, the average Australian house price rose by 22% – the biggest yearly increase in over 30 years. 

A Home Loan for Business Owners helps you unlock the extra equity in your property. 

Who’s It For?

If you’re a business owner looking to purchase a home or refinance your existing property, you could benefit from this type of secured finance. 

It’s a cost-effective way to secure long-term funding without the headache of extensive paperwork and strict lending criteria required by the banks. 

You can use a home equity loan for business purposes to get the funding you need to capitalise on opportunities quickly. 

2. Business Loan Secured by Residential Property

A Business Loan secured by residential property is a solution that helps you to access higher funding limits and longer terms compared to many other types of secured financing. It works similarly to other types of secured business finance. 

You’ll be able to borrow a set amount based on the value of the property you use as security and other affordability criteria. In most cases, you will be able to access up to 80% of the value of the equity you have built up in your property.

Once you receive the funding, you repay the amount borrowed plus interest over the agreed term. 

Who’s It For?

If you want to raise capital to fund growth, cover the cost of a management buyout, or invest in your business, a property secured Business Loan could be the ideal solution. 

It’s a good option for businesses looking to use residential property to secure funding. 

A Business Loan secured against property can help you access higher funding limits and longer terms than many other types of secured finance. The property security reduces the risk for the lender, so the rates for a secured loan are typically lower than types of unsecured business finance

You can use the funding for any business purpose, including refinancing existing debt.

3. Secured Business Overdraft

A secured business overdraft allows you to continue to access funds once your account balance has reached zero. It provides a safety net so you can access working capital during cash flow gaps. 

It works similarly to a personal overdraft. Your funding provider will agree on an overdraft limit. You’ll be charged interest on the amount of credit you use up to your limit. You will stop paying interest once you lift your account balance above zero. 

Because of the property security, you may be able to access a higher limit and more competitive interest rates compared to a standard secured overdraft facility. 

Who’s It For?

A secured business overdraft can be a good option for businesses that encounter cash flow gaps due to periods of growth, seasonal sales, or extended payment terms. It provides a financial buffer so that you can protect your cash flow from unplanned expenses. 

If extended payment terms are stalling your business growth, a Debt Factoring facility, also known as Invoice Finance, could be an effective way to release cash from your outstanding sales invoices.

4. Business Cash on Call

Business Cash on Call is an alternative to an overdraft. It’s a working capital funding solution secured by residential property. It acts as a line of credit that you can access when you need to.

You can draw down your balance to cover unplanned costs or bridge a cash flow gap and repay the balance later. It allows you to access as much or as little credit as you need every month up to your credit limit. You’ll be charged for the credit that you choose to use.

Because of the finance on property security, you can generally access higher credit limits and lower rates than other secured lending types.

Who’s It For?

A property secured Business Cash on Call facility can benefit business owners looking for a flexible line of credit to support working capital needs. You can access credit to cover cash flow gaps, unplanned costs, and pay suppliers. 

It’s an effective way to boost cash flow during periods of growth and a financial safety net you can use when you need it. 

5. Secured Debt Consolidation Loan

A secured debt consolidation loan can combine all your existing debt repayments into a single monthly repayment. 

You can use property collateral to access a loan that can be used to pay off your other debts. You’ll then repay the loan provider over the term length. 

Using property as security may help you access a lower interest rate than you currently pay for your existing debts. It also makes it easier to manage your business debts with a single monthly repayment.

You can use a ScotPac Business Loan as a debt consolidation loan.

Who’s It For?

If your business has credit card debt, unsecured loans, or other existing debt, you may be a good fit for a property secured debt consolidation loan. The interest rates and charges on business credit cards and some unsecured loans are typically higher than the average property secured debt consolidation loan. 

This type of funding could also be helpful if your business credit rating has improved since you last borrowed money. You may be able to access more competitive interest rates and reduce your monthly repayments.

What Are the Pros & Cons of Property Secured Business Finance?

Using your property as security may lower your risk profile. As a result, you can typically access competitive rates and longer terms compared to other types of financing. 

But all types of financing have advantages and disadvantages.

Here are the pros and cons of property secured business finance that you should consider before applying.

Pro: Competitive Interest Rates

Property secured funding is generally cheaper than other types of financing. The additional security reduces the risk to the lender, so you can usually secure lower interest rates. 

Pro: High Funding Limits

You can usually access up to 80% of the value of the equity you own in your property. This typically allows you to get more funding than an unsecured loan or finance facility. 

If you plan to invest in your business, a property secured facility can be a cost-effective way to raise a significant sum. 

Pro: Longer Terms

The terms for property secured business finance are longer than other types of financing like unsecured loans. This can lower your monthly repayments, so you better manage your cash flow and reinvest more in your business.  

Pro: Accessible

If you have a low credit rating or short trading history, you may still qualify for property secured funding. Using your property as collateral can help you raise funds that you wouldn’t be able to access otherwise.

Con: You need equity

You need to own equity in your home that you are willing to use as collateral. If you don’t own a residential property, you may still be able to access Invoice Finance, Trade Finance or Equipment Finance

Con: Risk of Losing Property

There is a risk of losing your property if you cannot repay the funding. As with all types of financing, you should only borrow what you can afford.

Con: Extended Application Process

Depending on the type of funding, it can take longer to secure a property secured funding facility than other types of financing. The lender will need to determine the value of your property and equity before releasing funds. 

Who Qualifies For Property Secured Business Finance?

To qualify for property secured business finance, you will typically need to be an Australian business owner or self-employed individual who has held an Australian Business Number (ABN) for at least 12 months.

If you don’t qualify for property secured funding, you may still be eligible for Invoice Finance. Instead of residential property, you can use your unpaid sales invoices as security to access financing. 

What’s the Difference Between Secured and Unsecured Business Finance?

The main difference between secured and unsecured business finance is the use of collateral.

With secured finance, the funding facility uses an asset such as your residential property as security. If you cannot meet your repayments, the lender can use the asset to recoup the finance cost.

You can also use business assets as collateral, including your accounts receivables, stock, and equipment. 

With unsecured finance, the funding facility is not secured by any assets. Instead, the lender will provide funding based on your credit score, turnover, trading history, and other factors. You may also be required to provide a personal guarantee. 

Because of the asset security, interest rates are generally lower for secured business finance. You may also be able to access higher funding limits and longer repayment terms. 

Fixed or Variable Rate Secured Business Loans

It’s important to understand the differences between fixed and variable interest rates when you’re considering your business property finance options. 

A fixed interest rate means the rate of interest will remain the same for an agreed period or the length of the funding term. This can help you plan your budget as you’ll know exactly what you need to repay each month. 

A variable interest rate means the rate of interest can increase or decrease based on a third-party benchmark or index like the Reserve Bank of Australia. If interest rates drop, your cash flow will increase. 

A fixed-rate can protect you from any rise in interest rates, but you will also miss out on savings if variable rates drop. Here at ScotPac, our Property Secured Finance facilities use variable interest rates.

How to Apply for Property Secured Business Finance With ScotPac

It’s easier than ever to apply for property secured business finance. You can get conditional approval within 48 hours of submitting your application with minimal paperwork required. 

Fill in our simple online enquiry form in less than 2 minutes, and we’ll contact you shortly to discuss your application. We can advise you on the right financial solution for your needs and help you prepare any documents you need. 


You can also call us on the number below and speak with one of our Property Secured Business Finance Experts.