Quick answer
A working capital loan secured by property is a short-term private loan, backed by residential, commercial or industrial real estate, that funds a business's day-to-day cash needs, such as wages, super, suppliers and stock, through a specific gap: a seasonal peak, a growth phase, slow debtors or a large contract. It runs for a defined term, from a few months 1 to 24 months, and is repaid by a planned event.
Key points
- Funds a defined working capital gap, not a permanent shortfall
- Size it from your cash cycle: debtor days, stock days and supplier terms
- Payday Super since 1 July 2026 means super leaves the account within days of each payday
- Interest can be prepaid or capitalised so the loan doesn't compete with wages
- Exit is a named event: collections, a seasonal sell-through, a contract payment or a bank facility
- Amounts
- $20k – $5m
- Term
- Short-term; 1 to 24 months on a first mortgage
- Interest
- Prepaid, capitalised or monthly
- Assessment
- No formal valuation required
Working capital is the money a business needs to keep running between paying for things and being paid for them. Stock is bought before it’s sold. Staff are paid before customers settle invoices. Suppliers want payment on 30 days while customers take 60. The more a business grows, or the more seasonal it is, the more cash is tied up in that cycle.
When the cycle stretches beyond what the bank account and the overdraft can carry, a short-term loan secured on property can fund the gap for a defined period. This page explains how to size working capital properly, what has changed with Payday Super, which structure suits, and when a short-term loan is the wrong fix for a permanent problem.
What is working capital, and why does it run short?
business.gov.au defines working capital as the cash available to a business for day-to-day expenses. It sits between current assets, which it describes as cash or anything you can convert into cash within 12 months, and current liabilities, which are due for payment within 12 months.
It usually runs short for one of five reasons:
- Growth. More sales mean more stock and more debtors before more cash arrives.
- Seasonality. Retailers, wholesalers, tourism operators and farm suppliers build up stock and costs ahead of their peak.
- Slow debtors. A large customer moves from 30 to 60 or 90 days.
- A big contract. Wages and materials are spent long before stage payments arrive.
- One-off lumps. BAS, insurance renewals, a tax debt, or a tightening of supplier terms.
How much working capital do you actually need?
Work it out from your cash cycle rather than guessing.
| Step | What to calculate | Example figures |
|---|---|---|
| 1. Stock days | How long stock sits before it’s sold | 45 days |
| 2. Debtor days | How long customers take to pay | 50 days |
| 3. Supplier days | How long suppliers let you take | 30 days |
| 4. Cash cycle | Stock days + debtor days − supplier days | 65 days |
| 5. Daily cash costs | Annual cash costs ÷ 365 | $6,000 a day |
| 6. Cycle funding need | Cash cycle × daily cash costs | $390,000 |
| 7. Add lumps | BAS, super, insurance, known one-offs | + $60,000 |
The result is how much cash the business needs tied up at its busiest point. Compare that with the cash and limits you already have; the difference is the gap. Ask your accountant to sanity-check the figures, especially for seasonal businesses where the peak matters more than the average.
What has Payday Super changed?
A lot, for employers. The ATO says Payday Super began on 1 July 2026, and contributions must now be received by employees’ super funds within 7 business days after paying employees, with some exceptions such as for new employees. Under the old quarterly system, many businesses effectively held super for up to three months. That buffer has gone.
If contributions arrive late, the ATO assesses the super guarantee charge, calculated on qualifying earnings and including compounding daily interest and an administrative uplift (now tax deductible, unlike the old charge). For a business with a large payroll, the change can lift the working capital needed by a meaningful amount in the first year. Our page on covering payday super and payroll looks at that situation in detail.
What can you do before borrowing?
business.gov.au’s cash flow guidance lists practical steps worth taking first:
- encourage upfront or early payment with discounts, late fees and deposits for special orders;
- automate invoicing and send invoices earlier;
- follow up overdue payments promptly;
- clear stock that isn’t selling and keep stock levels lean;
- negotiate better terms with suppliers;
- lease or hire equipment you only need briefly, and sell assets you no longer use;
- refinance or consolidate debts only if the new lender offers better terms.
Borrowing makes sense once those levers are pulled and a defined gap remains.
How does a property-secured working capital loan work?
- Size the gap using your cash cycle and known lumps.
- Name the exit. Collections after the peak, a contract payment, a bank facility, or a property sale.
- Choose the security. Business premises, an investment property or a home.
- Enquire. Property details, what’s owing, the amount and the exit.
- Receive terms and a Letter of Offer. Amount, structure, term, interest handling and fees.
- Settle. Funds go to the business account or directly to the ATO, suppliers or super funds as needed.
- Repay at the planned event.
Interest can be prepaid or capitalised, so the loan doesn’t add a monthly bill at the moment cash is tightest. See prepaid or capitalised interest.
Which structure suits working capital?
| Situation | Structure | Notes |
|---|---|---|
| Short seasonal gap, premises or home with a bank loan | Caveat loan | Quick; can convert to a registered second mortgage |
| Gap of six months or more | Registered second mortgage | Firmer position for a longer term |
| Debt-free premises or investment property | Private first mortgage, 1 to 24 months | Usually the keenest pricing |
| Several properties with partial equity | One loan over more than one title | Spreads the requirement |
A caveat or second mortgage sits behind another lender and so generally costs more than a first mortgage. For the wider product view, see secured working capital loans.
How does it compare with other working capital options?
| Option | Good for | Watch for |
|---|---|---|
| Bank overdraft or line of credit | Ongoing, revolving needs | Limits are often set on last year’s figures; can be reduced at review |
| Debtor finance or factoring | Businesses with strong debtor books | Costs tied to invoices; customers may know |
| Unsecured online lender | Small, fast top-ups | Daily or weekly debits that strain cash flow |
| Supplier extended terms | Free if negotiated | Not always available |
| Property-secured short-term loan | A defined gap with a clear exit | Short term; property secures it |
Our guide on a business line of credit vs a secured short-term loan explains when a revolving facility is the better tool, and secured vs unsecured business loans covers the wider trade-off.
Who does this suit?
It suits:
- seasonal businesses carrying stock and debtors through a peak;
- growing businesses whose bank limits haven’t caught up;
- contractors funding wages and materials ahead of stage payments;
- employers adjusting to Payday Super’s shorter cycle.
It doesn’t suit:
- businesses losing money every month, where the gap is permanent;
- needs that will recur at the same size every quarter with no exit;
- personal spending.
When is a short-term working capital loan the wrong move?
- The shortfall is structural. If the business needs more working capital forever, a 12-month loan just postpones the problem. A permanent facility, new equity or a change to terms is the answer.
- The exit is “trading will improve”. That isn’t a defined event. Name the collection, contract or refinance that will repay it.
- Cheaper levers haven’t been pulled. Chase debtors, trim stock and negotiate terms first.
- The bank will lift your limit. If it will, on your timetable, it’s usually cheaper.
What it costs (without the guesswork)
We set the price on each loan’s security, LVR, term and exit, aiming for the sharpest price your position supports. The cost includes interest (prepaid, capitalised or paid monthly), an assessment fee that is particular to each loan and shown in your Letter of Offer, and the legal and registry costs of putting the security on and removing it later. There’s no formal valuation required, which keeps the timetable short.
Illustrative example: funding a wholesaler’s peak
Illustrative: a Hobart homewares wholesaler builds stock from September for the Christmas peak and offers retailers 60-day terms. Its cash cycle peaks at about $450k above normal in November, and its overdraft covers $150k of that. The business owns its warehouse, worth about $1.5m with $600k owing. At an illustrative 70% LVR band the warehouse supports total secured debt of about $1.05m, leaving room of about $450k behind the bank.
| Item | Amount |
|---|---|
| Caveat loan over the warehouse | $330,000 |
| Less illustrative allowance for 6 months’ capitalised interest | $(20,000) |
| Less assessment fee, legal and caveat costs | $(10,000) |
| Net working capital | $300,000 |
| Covers the gap the overdraft can’t | $300,000 |
Collections from January to March repay the loan in full at month six. Nothing is paid monthly during the peak. The figures are round and illustrative only.
Key terms for working capital
- Cash cycle: the days between paying for inputs and collecting from customers; the longer it is, the more cash the business needs.
- Debtor days: the average time customers take to pay invoices.
- Stock days: the average time stock sits before it’s sold.
- Seasonal peak: the point in the year when stock and debtors, and therefore cash needs, are highest.
- Super guarantee charge: what the ATO assesses when super isn’t paid on time, including interest and an administrative uplift.
Documents you’ll need
- A cash flow forecast showing the gap and the exit
- Recent BAS or management accounts
- Aged debtors and creditors lists, if collections are the exit
- Contracts or purchase orders, if a contract is the exit
- Title details and loan statements for the security property
- Company or trust details and photo ID for every borrower, director and security owner
How fast can working capital be funded?
Smaller property-secured sums from $20k to $250k can be possible the same day, and larger loans up to $5m can be possible in 24–48 hours once the file is complete. If the gap comes from a contract, see funding a big contract. If a big customer is paying slowly, see late-paying customers, and for stock builds, stock and inventory. Tasmanian businesses can read about private lending in Hobart and Tasmania.
Cash cycle stretched? Show us the gap and the property and a specialist will tell you what can be funded and for how long.
Need working capital for a set period? See if you qualify
You can enquire without a credit check, and your business details stay with one direct lender rather than going out to many. A specialist works through your cash cycle and your exit with you. fundU, our lending partner, lends directly against the property.
Be accurate about the gap, the exit, the property’s likely worth and every loan secured on it. Precise answers are what make a quick, reliable answer possible. Start your enquiry.
Frequently asked questions
We're a Hobart wholesaler. Every year from September to December we carry about $400k more in stock and debtors than the rest of the year, and our overdraft limit doesn't stretch. Can we borrow against our warehouse for the season?
Yes. A second mortgage or caveat over the warehouse can fund the seasonal gap, with interest capitalised so there's nothing to pay monthly during the busy months. The exit is the January to March collections, so set the term to cover them with a buffer.
How do I work out how much working capital I actually need?
Map the cash cycle. Add the days money is tied up in stock to the days customers take to pay, subtract the days your suppliers give you, and multiply by your average daily costs. Then add known lumps such as BAS, super and insurance. Your accountant can check the model.
What counts as working capital?
Government guidance describes it as the cash available to a business for day-to-day expenses. It's the difference between assets that turn into cash within 12 months, such as debtors and stock, and liabilities due within 12 months.
Has Payday Super changed our working capital needs?
For many employers, yes. Since 1 July 2026, the ATO requires super contributions to reach employees' funds within 7 business days after payday, instead of quarterly. That money now leaves the account each pay cycle, so businesses that used to hold super until the quarter's end need more cash on hand.
What happens if super is late under Payday Super?
The ATO says the super guarantee charge applies when contributions don't arrive in time. It's calculated on qualifying earnings and includes compounding daily interest and an administrative uplift. Our payday super page covers how property-secured funding can help.
Is a working capital loan the same as an overdraft?
No. An overdraft or line of credit is an ongoing limit you draw and repay. A property-secured working capital loan is a set amount for a set term with a planned exit. If your need is permanent, a revolving facility may suit better; our guide comparing the two explains when.
Can the loan pay our ATO debt as well as day-to-day costs?
It can, if both fit the equity and the exit. Paying an overdue tax debt is often part of restoring working capital. Our ATO debt page explains how that works.
Do I need to show profitable accounts?
The decision rests mainly on the property and the exit. You'll need to show how the loan will be repaid, which might be debtor collections, a contract payment or a refinance, so recent figures help.
We have a big contract starting but the client pays 60 days after each stage. Is that working capital?
Yes, and it's one of the clearest uses. The exit is the stage payments. Our page on funding a big contract covers that case in more detail.
How small can a working capital loan be?
Loans start at $20k. Property-secured amounts between $20k and $250k can be possible the same day once documents are in.
Can I use my home to secure working capital for my company?
Yes, for a business purpose. Everyone on the title signs, and they should understand that the home secures the company's debt.
What if our seasonal peak runs late and collections slip?
Build a buffer into the term from the start, and talk to the lender early if you need more time. A caveat loan can be converted to a registered second mortgage if a longer term is needed.
Will you take our debtor book or stock as security?
No. The security is real estate: residential, commercial or industrial property, with vacant land and rural property considered case by case.
How quickly can working capital be available?
With documents in, loans up to $5m can be possible within 24–48 hours, and smaller sums the same day.