Hub A · Borrowing
How much can I borrow? Amounts, security and cost
Straight answers on loan size, equity, security and what a business loan really costs — each one starting with a short answer you can quote.
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- Q.A01 How much can I borrow for my business? Most Australian businesses can borrow somewhere between $5,000 and $5,000,000, but your number is set by three limits: the security you can offer, the repayments your cash flow can carry, and what the money is for. Without property, trading businesses typically access $5,000 to $500,000 based on turnover and bank statements. With property security, loans from $20,000 to $5,000,000 are possible.
- Q.A02 How do lenders work out how much to lend my business? Lenders size a business loan by testing serviceability (can the business carry the repayments from its real cash flow), security (what the loan is backed by, if anything), and purpose (what the money will achieve and how it will be repaid). Unsecured lenders lean mostly on turnover and bank statement conduct; property-secured lenders lean mostly on equity and a clear repayment or refinance plan.
- Q.A03 How much can my business borrow without property? Without property, a trading Australian business can typically access $5,000 to $500,000 through unsecured loans, cash-flow loans or a business line of credit. The amount is sized mainly on your turnover, the pattern of deposits in your business bank statements, how long you've been trading and existing debts. Steady deposits, a clean account and a clear purpose support the higher end.
- Q.A04 How much of my property's equity can I borrow against for my business? You can usually borrow against part of your property's equity, not all of it. Lenders apply a loan-to-value ratio (LVR) limit to the combined debt on the property — your existing mortgage plus the new business loan. The usable equity is the gap between that limit and what you already owe. Property-secured business loans range from $20,000 to $5,000,000 over residential or commercial property.
- Q.A05 What can I use as security for a business loan? The strongest security for an Australian business loan is real property — a home, investment property, commercial building or land — used through a first mortgage, second mortgage or caveat. Business assets such as vehicles and equipment can be secured through a registration on the Personal Property Securities Register, and directors often give personal guarantees. Many trading businesses also borrow unsecured, backed by turnover rather than an asset.
- Q.A06 Should I choose a secured or unsecured business loan? Choose unsecured when you need a smaller amount, typically $5,000 to $500,000, your business trades steadily and you'd rather not use property. Choose secured when you need more, from $20,000 up to $5,000,000, want a longer term with smaller repayments, have a short trading history or past credit issues, and are comfortable using property. The right answer depends on amount, purpose and how repayments fit your slow months.
- Q.A07 Can I use my home to secure a business loan? Yes. Your home can secure a business loan through a first mortgage, a second mortgage behind your existing home loan, or a caveat. Property-secured business loans range from $20,000 to $5,000,000. The loan must be for business purposes, everyone on the title must be involved, and the amount depends on your home's value and existing mortgage. The trade-off is that your home is at risk if the loan isn't repaid.
- Q.A08 What does a business loan really cost? A business loan's true cost is the total dollars you pay beyond the amount borrowed: interest plus every fee — establishment, valuation, legal, line or account fees, and any early repayment or discharge costs. Because every loan is priced on the business's own circumstances, the only reliable comparison is total cost of finance in dollars over the time you'll actually hold the loan, set against what the money achieves.
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