Residential property, working for a business purpose.
A business loan secured by residential property uses a house, a unit or a portfolio as security, but the funds go to a business purpose. The borrower is often a company or a trust, and the property is often held in that same structure.
It suits business owners with equity in residential property that they need working in the business, and investors whose company and trust structures don't fit a bank's standard residential policy. It is not a home loan, and it can't be used for personal spending. Individuals buying or refinancing an investment property in their own name fall under consumer credit law, so those go to one of our trusted brokers.
We work with private and non-bank lenders who specialise in business loans secured by residential property, and we stay across what they're funding right now. If your scenario fits, we can connect you with the lenders it suits.
Most people assume a loan secured by a house is a home loan. Australian credit law doesn't see it that way. The National Credit Code looks at who is borrowing and what the money is for. Credit to individuals for personal, domestic or household purposes is regulated consumer credit, whatever secures it. Credit for a genuine business purpose sits outside that regime, even when a house or unit is the security.
The security doesn't decide what kind of loan it is. The purpose does.
That's why lenders ask borrowers to sign a business purpose declaration, and why they look behind it. The law doesn't let a lender rely on a declaration if it knows, or has reason to believe, the money is really for personal use. A signature doesn't make a loan a business loan. The facts do.
Company and trust borrowers. Residential property is often held in a company, or in a family or unit trust, for tax, asset protection or estate planning reasons. Lenders in this space understand those structures: corporate trustees, guarantees from directors, and trust deeds that need to permit the borrowing. How to structure your holdings is a question for your accountant or financial adviser. Finding lenders who suit the structure you have is where we come in.
First, the purpose: what the funds are for, and evidence that matches it. Then the structure: who owns the property, who is borrowing, and whether the company constitution or trust deed allows the loan and the security. Directors, and often the people behind a trust, are usually asked for personal guarantees.
Then the property and the numbers: its value, what's already owed against it, and the loan-to-value ratio that results. Residential property is widely traded and well understood by valuers, which is exactly what makes it such useful security for a business need.
And the exit. A clear, supported plan for repayment, whether from a sale, a refinance or the business itself, does more for an application than almost anything else.
These loans are priced above standard home loans, but that's usually the wrong comparison. A home loan is built for an individual repaying over decades from a salary. A business-purpose loan is built for a business need, a structure banks find harder to assess, and a timeline that often matters more than the rate. Pricing follows the loan-to-value ratio, the strength of the purpose and the exit, and the complexity of the structure. There are usually establishment fees, and interest may be paid monthly, prepaid or capitalised.
Getting indicative terms costs you nothing, and any fees are agreed with you up front, before any work starts.
This page is general information only. It isn't financial, credit or legal advice and doesn't take into account your particular circumstances. Lending decisions are made by the lender.
Pocket compass, 19th century Taking a bearing before setting out.
Yes, if the funds are for a genuine business purpose, or the borrower is a company or trust investing. Private and non-bank lenders will take residential property as security for business lending, and they'll ask you to confirm and document that purpose.
Across our lender network, business-purpose loans secured by residential property go up to $40m. How much a lender will advance depends on the property's value, what's already owed against it and the strength of the exit.
Yes. Lenders in this space regularly lend to companies and trusts, usually with guarantees from the directors or the people behind the trust. The company constitution or trust deed will need to allow the borrowing.
No. These loans are for business purposes, or investment through a company or trust, never for personal or household use. Individuals buying an investment property in their own name fall under consumer credit law. We don't arrange consumer loans at PLG, but our trusted brokers do.
A signed statement from the borrower that the funds are for a business purpose. Lenders can only rely on it if it matches the facts, so the purpose needs to be real and documented.
Often, yes. Private lenders assess the property, the purpose, the structure and the exit rather than applying a bank's fixed rules. Every lender has its own criteria, and the lender makes the credit decision.
If you're deciding how to hold property or which entity should borrow, yes. Your accountant or financial adviser can advise on the structure, and we can then connect you with lenders who suit it.
