Quick answer
Builder funding against property is a short-term private business loan secured on real estate a builder already owns, such as a home, a yard or an investment property, rather than on clients' jobs. It funds working capital: subcontractor and supplier bills, materials, a progress claim that's been held up or an ATO debt. Loans run from $20k to $5m, and interest can be prepaid or capitalised.
Key points
- Secured on the builder's own existing property, never on a client's site or job
- Bridges slow progress claims, retentions and supplier accounts
- Can clear an ATO debt so the business stops accruing interest on it
- Interest can be prepaid or capitalised, protecting weekly cash flow
- Bad credit, ATO debt and past defaults considered case by case
- Amounts
- $20k – $5m
- Speed
- Same day possible for $20k–$250k
- Security
- Homes, yards, commercial, land
- Valuation
- No formal valuation required
Building is a cash-hungry trade. Subcontractors want paying on Friday, the timber yard wants its account cleared by the end of the month, and the client’s progress payment is stuck waiting for a certifier. Even a profitable builder with a full order book can find the bank balance running thin.
Most builders own something valuable: their home, a yard, a workshop or an investment property. Builder funding secured on that property turns the equity into working capital without touching your clients’ projects.
What is builder funding against property?
It is a short-term private business loan for a building company or sole-trader builder, secured by a first mortgage, second mortgage or caveat over existing property the builder (or their company or trust) owns. Amounts run from $20k to $5m.
Two points are worth stating plainly:
- It isn’t secured on a client’s job. The lender never takes security over a site you are building on for someone else.
- It isn’t a construction loan. There are no progress draws or staged releases. The approved amount is advanced at settlement and used for the business purpose agreed.
The property is assessed as it stands today. No formal valuation is required, which saves a valuer’s fee and the wait for a report.
What do builders use the funds for?
| Pressure point | How secured funding helps |
|---|---|
| Progress claim delayed by certification or a client dispute | Covers wages and subbies until the claim is paid |
| Supplier accounts at their limit | Clears the account so materials keep arriving |
| Retentions held for months after completion | Releases cash tied up in finished jobs |
| ATO debt from GST, PAYG or income tax | Pays the debt out in one go |
| Bulk materials or plant purchase | Locks in pricing or availability |
| A deposit on your own development site | See site deposit funding |
On GST in particular, the ATO notes that a registered business may have to pay GST on a property sale but can generally claim GST credits for construction costs. The timing of those credits and of your BAS can still leave a gap between paying suppliers and getting money back, which is often where builders feel the squeeze.
If any of those sound familiar, find out what your property could unlock.
Can a builder borrow to clear an ATO debt?
Yes. ATO debts are one of the most common reasons builders borrow against property, and an existing ATO debt is considered case by case.
The ATO’s own guidance is clear on the cost of carrying a debt on a payment plan: tax debts on a plan continue to accrue the general interest charge, and it compounds daily. The ATO also says income tax and activity statement accounts need separate payment plans. For a builder juggling both, a single secured loan with a set term and a defined exit can be easier to manage than several plans running side by side.
There’s more detail on how lenders view tax debts on second mortgages for bad credit and ATO debt.
How does HBC insurance fit in?
Residential builders in NSW will know the rules on home building compensation (HBC) insurance. SIRA says all building businesses must have HBC insurance for home building projects valued over $20,000 (including GST), and the certificate must be given to the client before starting work or taking any payment, including a deposit. Before buying insurance for a specific project, the builder must apply to icare for eligibility.
Some builders use secured funding to tidy up overdue creditors or tax before an eligibility application. Check with your accountant and insurer how any new borrowing sits in your accounts.
Illustrative example: a builder between progress claims
Illustrative: A Geelong builder has three homes under construction. A $240k progress claim is held up for five weeks by a certifier’s backlog, an ATO activity statement debt of $110k is due, and two key subcontractors need paying. The builder owns a yard and shed, debt-free, worth around $1.1m.
- Security: a first mortgage over the yard
- Loan: $380k, covering the ATO debt, the subcontractors and a working buffer
- Interest: capitalised, so weekly cash flow goes to wages and materials
- Term: 12 months
- Exit: reduced substantially when the progress claim and the next two milestone payments land, with the balance cleared from final payments at handover or refinanced to the builder’s bank once the accounts are up to date
The builder keeps the jobs moving and the subbies on side, and the ATO debt stops growing.
Which property and loan type suit a builder?
- Debt-free property: a private first mortgage, the most straightforward option, with terms 1 to 24 months.
- Home or yard with a bank loan: a second mortgage behind the bank, usually with the bank’s consent, which keeps your existing facility untouched. Learn more on second mortgage business loans.
- Urgent need: a caveat loan, which can later be converted to a registered second mortgage.
Pricing is set on each deal’s security, LVR, term and exit, with the sharpest price your situation allows. A small assessment fee applies and is shown on the Letter of Offer. Compare how this differs from a bank approach in private lender vs bank.
What paperwork does a builder need to provide?
Less than a bank would ask for, but it has to be right. Typically:
- title details for the property offered as security, and who owns it (you, your company or a trust)
- the latest statement for any loan already registered on it
- photo ID for each borrower, director and guarantor
- a short summary of what the funds are for, such as an ATO statement of account or a list of creditors to be paid
- evidence of the exit, for example the progress claims due, signed contracts for upcoming work or a sale you plan to make
Recent BAS lodgements and a current aged creditors list help tell the story, especially where there’s tax debt involved. The full list is in documents for a private mortgage.
See if you qualify for builder funding
There’s no credit check to enquire, and your details aren’t fired off to a long list of lenders. Our lending partner fundU, the direct lender behind this site, puts every enquiry in front of a specialist who knows how building cash flow works.
Give accurate details about the property, who holds title, everything owing against it, and how you’ll repay: the claims due, the jobs finishing, or the asset you’ll sell. Get that right up front and the answer you receive first is one you can plan around. Start your builder funding enquiry and get back to building.
Frequently asked questions
Is this a construction loan for my clients' jobs?
No. The loan is secured on property you or your business already own, such as your home, a workshop or an investment property. It isn't secured on any site you are building on and isn't drawn down against stages of a job. It is working capital for the building business.
Can I use the funds to pay an ATO debt?
Yes, an ATO debt is a common reason builders borrow against property. The ATO says tax debts on a payment plan continue to accrue the general interest charge, which compounds daily, so clearing the debt with a fixed-term secured loan can simplify things. An existing ATO debt is considered case by case.
My credit file has defaults. Can I still apply?
Yes. Bad credit, ATO debt and past defaults are considered case by case. The decision rests mainly on the equity in the property you offer and a clear plan to repay, such as a large progress claim, a completed job's final payment or the sale of an asset.
How fast can a builder get funds?
Smaller property-secured amounts, from $20k to $250k, are possible the same day, and funding is possible within 24–48 hours for up to $5m once documents are in. Having title details, ID and any existing loan statement ready speeds things up.
Will this affect my HBC insurance eligibility?
That is a question for your insurer and accountant. In NSW, builders must apply to icare for eligibility before buying home building compensation cover for a project, so it is worth checking how any new debt sits in your financials before your next eligibility review.