Manufacturing business loans secured on factory equity

Manufacturers spend money long before they see it come back. Raw materials are bought, machines run, staff work the shifts, freight goes out, and then the invoice sits with a customer for weeks. Add a new CNC machine, an R&D program or a move to a bigger site, and the gap between spending and receiving grows.

Many manufacturers own their premises, and industrial property often holds significant equity. A property-secured private loan turns that equity into working funds for a defined period, without waiting on a bank’s full credit process.

Why do manufacturing businesses need short-term funding?

The pressures are structural, not a sign of trouble:

• Working capital scales with orders. A larger order means more materials, more labour and more freight up front. Growth eats cash before it produces any.
• Machinery is lumpy. For a small business (aggregated turnover under $10 million), the ATO only allows an immediate deduction for an asset whose full cost is under $20,000. A press brake, a laser cutter or a filling line costs far more, so the cash leaves on delivery while the tax deductions trickle in over years.
• R&D refunds arrive after the year ends. Under the R&D Tax Incentive, the ATO requires activities to be registered within 10 months of the end of the income year, and the offset is claimed in the company tax return. A company with aggregated turnover under $20 million that is not controlled by exempt entities can claim the refundable offset. The money spent on R&D during the year comes back only after lodgement and processing.
• Premises outgrown. Expanding production often means a bigger factory, with a deposit, duty, a fit-out and a move all at once.
• Customer terms. Large customers can set long payment terms, and small suppliers have limited power to change them.

business.gov.au notes the government announced changes to the R&D Tax Incentive in the 2026–27 Budget, starting from 1 July 2028, with the program running under current rules until then. Your R&D adviser will know how the changes affect future claims.

What do manufacturers use property-secured loans for?

Need	Typical security	Usual structure	Typical exit
New machinery or production line	Owned factory	Second mortgage behind the bank, or first mortgage if debt-free	Equipment finance, bank refinance or cash flow
Materials for a large order	Factory or home	Caveat or second mortgage	Customer payment
Waiting for an R&D tax refund	Factory or investment property	Second mortgage with capitalised interest	Refundable R&D offset
Buying a larger factory	New factory plus current premises	Private first mortgage	Commercial bank loan, or sale of old premises
Buying the factory you lease	The factory itself, sometimes with a second property	Private first mortgage	Bank refinance after settlement
ATO or payroll arrears	Any owned property	Second mortgage or caveat	Refinance or trading cash flow

For more on lending against industrial property, see commercial property first mortgages and second mortgages on commercial property.

Should machinery be funded with a property loan or equipment finance?

Often both have a place. Equipment finance spreads the cost of a machine over its working life, which suits a long-lived asset. A property-secured loan suits the parts equipment financiers won’t cover, or won’t cover fast enough:

• the deposit an equipment financier asks for;
• installation, electrical upgrades, footings and commissioning;
• second-hand or imported machines that are harder to finance;
• the period between ordering and first production, when nothing is being sold from the new line.

A common pattern is to settle the purchase with a short private loan, then move the machine onto equipment finance or a bank facility once it is installed and running.

How does an R&D refund bridge work?

This is one of the clearest manufacturing use cases, because the exit has a known source.

1. The company runs eligible R&D during the year and spends heavily on it.
2. After year end, it registers the activities and lodges its tax return with the R&D schedule.
3. While the refund is being processed, a property-secured loan funds the next stage of work.
4. When the refundable offset is paid, the loan is repaid.

The lender does not take security over the refund. It relies on the property, and treats the expected refund as the exit. That is why the claim needs to be soundly prepared: if the claim is reduced, the exit shrinks, and a fallback (such as a bank refinance or a sale) needs to be ready.

Illustrative example: a Brisbane precision engineering firm spent heavily during the year developing a new component. Its adviser expects a refundable R&D offset of about $380k once the return is lodged and processed. Meanwhile, a defence supply chain customer wants a pilot run that needs $300k of materials and tooling now. The directors’ family trust owns the factory, worth about $2.8m with $1.1m owing to a bank. A $350k second mortgage over the factory, with interest capitalised, funds the pilot run. When the R&D refund lands, the private loan is paid out and the mortgage is discharged.

If you have a refund or an order with a known date, see what the factory could fund in a minute.

What property do manufacturers usually offer?

• An owned factory or industrial unit. Industrial property is security the lender knows well, and it is often the largest asset the business controls.
• A warehouse or storage unit. Same treatment as other industrial property.
• A director’s home. Common when the factory is already heavily borrowed against. All registered owners must sign, and any bank loan on the home keeps its first ranking.
• Property owned by a related trust or company. Very common in manufacturing. See company or trust owned property.

There is no formal valuation required, because the lender assesses the property directly. That takes time and cost out of the deal, which matters when an order deadline is set by someone else. Read how assessment works without one.

Who is this right for, and who is it not right for?

Right for: manufacturers with property equity, a defined need and a known way to repay: an order, a refund, a refinance or a sale.

Not right for: a business funding ongoing losses with no turnaround plan, a long-term need better suited to a bank, or anyone without property to offer.

What documents will the lender ask for?

Your accountant or financial controller can usually pull these together in a day:

• ID for each borrower, director and guarantor;
• ABN or ACN, and the trust deed for any trust that owns property or borrows;
• title details and current statements for each loan secured on the property;
• the purchase order, equipment quote, factory contract or R&D adviser’s letter that explains the purpose and the exit;
• recent BAS, and an aged debtors report if customer payments are the exit.

The documents for a private mortgage guide has the full list.

What does it cost, and how are the risks kept in check?

Pricing is set on each deal’s security, LVR, term and exit, and we aim for the sharpest price your situation allows. A first mortgage over debt-free property generally costs less than a second mortgage or caveat. A small assessment fee applies, varies per loan and is shown on the Letter of Offer. Interest can be prepaid or capitalised; see prepaid or capitalised interest for the trade-off.

Keep these risks in view:

• Order delays or cancellations. Choose a term with slack for late payment.
• A reduced R&D claim. Have a second exit ready.
• Over-borrowing. Borrow what the project needs, not the maximum equity allows.

Manufacturers who also run their own freight face the same timing gap described on our transport and logistics page.

At a glance

• For: fabricators, food and beverage producers, engineering, printing, packaging and other makers
• Security: factory, warehouse, industrial unit, home or investment property
• Structures: first mortgage, second mortgage or caveat
• Lender: fundU, the direct lender behind this site

Could your factory help you qualify?

There is no credit check when you enquire, and your details go to one direct lender rather than being circulated around a panel. A specialist reads every enquiry.

Tell us about the property, what is owing on it, the amount and the reason, as accurately as you can. Correct figures are what produce a reliable answer the first time. Start your enquiry.