Business-purpose finance only. A business owner can hold valuable property and still face a cash shortfall. Property equity and cash flow are different: borrowing against an asset may provide funds, but it also creates costs and repayment obligations. It does not automatically solve an ongoing trading loss.
Start with the cause of the cash shortfall
Identify the amount needed, what it will pay for and why cash is unavailable. A timing gap between paying suppliers and receiving a documented customer payment is different from a business that repeatedly spends more than it earns.
Prepare a cash-flow forecast and test whether the business can support new repayments. Consider whether collecting overdue invoices, reducing expenditure, changing payment arrangements or contributing equity could address the problem without another secured loan. Obtain professional advice if the business cannot meet its obligations.
Property equity is not the same as available borrowing
Equity is broadly the property’s value less secured debt. A lender may accept a different value from the owner’s estimate and apply its own lending limit. Existing mortgages, security priority and transaction costs affect the net amount that could be released.
Hypothetical calculation only: a property valued at $1 million with $500,000 secured debt has $500,000 equity before costs. If a lender hypothetically permitted total secured exposure of $650,000, the headroom would be $150,000 before fees and any retained interest—not $500,000. These figures illustrate arithmetic, not an available lending limit or offer.
See our business-purpose equity release service for the relevant assessment pathway.
Compare the structure, not just the headline amount
A refinance may replace existing debt and release additional funds. A second mortgage business loan may sit behind an existing facility, subject to lender requirements, consent and priority arrangements. Neither is automatically the better option.
For each proposal, ask how much usable cash reaches the business, what existing debt must be repaid, and what security or guarantees are required. Compare the same net funding requirement over the same expected period.
Why higher leverage needs more care
Borrowing more against the same property reduces the buffer available if its value falls or selling costs increase. A high loan-to-value ratio is not a promise of approval, easier assessment or faster settlement.
Do not assume that 90% lending is available for your property or transaction. Any potential limit depends on lender criteria, accepted value, property type, location, existing exposure and the proposed structure. A smaller facility may be more manageable, but the repayment plan still needs to work.
Check costs and the downside case
- Review interest, establishment charges, valuation, legal and discharge costs.
- Check whether interest is paid regularly, retained upfront or added to the debt.
- Read minimum-interest, early-repayment, extension and default provisions.
- Identify the total amount due at maturity and the evidence supporting repayment.
- Test a delayed customer payment, slower sale or unsuccessful refinance.
A future refinance is not assured. If repayment relies on selling property, allow for realistic marketing time, selling costs and other secured payouts. Default can expose the secured property to enforcement; guarantees can create additional personal exposure. Independent legal and financial advice is important.
What to prepare for an assessment
Provide the borrower and ownership details, itemised business purpose, required net funds, property information, existing debts, timing and proposed repayment source. The lender may also request financial statements, bank records, valuation and legal documents.
business.gov.au’s business-loan guidance recommends reviewing income, expenses, debts and cash flow, then comparing costs, security and conditions. Property ownership alone does not replace that preparation.
Common questions
Does being equity-rich guarantee approval?
No. The lender must assess the borrower, purpose, security, liabilities and repayment plan against its criteria.
How quickly can funds be available?
There is no universal timeframe. Assessment, valuation, existing lender requirements, legal work and completion of conditions affect settlement. Do not commit to a deadline on the assumption that finance will arrive.
Can this service cover household expenses?
No. Basic Finance’s service is for genuine business-purpose and commercial finance. Read the business-purpose lending policy; consumer expenditure must not be relabelled as business borrowing.
Discuss a clearly defined business requirement
Contact Basic Finance with the purpose, required net amount, property, current debt and proposed exit. Finance remains subject to lender criteria, verification, due diligence and formal approval.
General information only, not personal financial, tax or legal advice.