Quick answer
Both residential and commercial property can secure a private business loan from $20k to $5m. Homes and units are usually easier to lend against because so many buyers compete for them. Shops, offices and warehouses are judged more on location, the tenant, the lease and how specialised the building is, and the exit plan needs to allow for things like GST on a commercial sale.
Key points
- Residential, commercial and industrial property can all secure a business loan
- Homes tend to reach further into their equity because buyer demand is deeper
- Commercial security is read through its lease, tenant and zoning
- GST can apply when commercial property is sold, which affects the exit
- Vacant land and rural property are considered case by case
- Amounts
- $20k – $5m
- Security
- Residential, commercial or industrial property
- Land and rural
- Considered case by case
- Valuation
- No formal valuation required
A lender doesn’t ask “is this a nice property?” It asks “if this loan went wrong, how confidently could this property be turned back into money?” That single question explains almost every difference between how a house and a shopfront are treated as security. The answer shapes how far into the equity a lender will go, what documents it needs, and what your exit plan has to cover.
How do lenders see residential and commercial property differently?
Residential property is judged mostly on the bricks and the street: location, condition, land size and what similar homes have sold for lately. The buyer pool is deep, with owner-occupiers and investors both competing, so a well-located house can be sold in most market conditions.
Commercial property is judged on the bricks and the income. A shop, office or warehouse is often valued by the market on what it earns, so the lender reads the lease as closely as the title.
| What the lender looks at | Residential | Commercial and industrial |
|---|---|---|
| Who buys it | Owner-occupiers and investors | Investors, owner-operators, developers |
| Key drivers | Location, condition, land, recent sales | Location, tenant, lease term, rent, zoning |
| What helps | Established suburb, standard design | Long lease to a solid tenant, flexible building |
| What slows a sale | Unusual design, poor condition | Vacancy, specialised fit-out, short lease |
| GST on a sale | Existing homes: generally no GST | Generally taxable unless a going concern |
| Typical extra documents | Rates notice, insurance | Leases, rent roll, outgoings, insurance |
Neither type is “better”. A long-leased warehouse in a busy estate can be stronger security than a tired house on a busy road. It’s the specific property that counts.
Can I use my home as security for a business loan?
Yes. Plenty of business owners’ largest asset is the family home, and borrowing against it for a business purpose is common: clearing an ATO debt, buying out a partner, funding stock for a big contract or bridging until a commercial sale settles.
The loan is documented as a business loan, and the home is assessed the same way any residential security would be. Because buyer demand for homes is broad, residential security often supports a larger share of its equity than a comparable commercial property. Read how much equity can I use for how that share is worked out.
What makes commercial property strong security?
A few features consistently make a commercial or industrial title easier to lend against:
- A tenant with staying power and a lease with years, not months, to run
- Rent at market level, so a buyer isn’t inheriting an over-rented property
- A flexible building, such as a standard warehouse or strip shop, that suits many users
- Clean title: no unexpected caveats, easements that limit use, or disputes
- Sensible zoning that allows the current use and some alternatives
If the property is owner-occupied by your own business, the lender will think about what it would be worth with your business gone. A purpose-built food processing plant, for example, may suit far fewer buyers than an empty shell would.
More on lending against these assets is on our pages for a commercial property first mortgage and a second mortgage over commercial property.
Does GST affect a commercial property exit plan?
It can, and it catches people out. The ATO lists the sale of commercial property as a taxable supply, and its guidance on selling commercial premises says the seller is generally liable for GST on the sale price while being able to claim credits on related costs. Two exceptions come up regularly:
- Sale of a going concern. The ATO says GST doesn’t apply when the property is sold as a GST-free going concern, but every listed condition has to be met, including both parties agreeing in writing and the buyer being GST-registered (or required to be).
- The margin scheme. Where eligible, GST is worked out on the margin instead of the full price.
Existing residential premises, by contrast, are input taxed: the ATO’s example is the sale of existing residential premises, where no GST is charged on the sale.
Why does this matter to a lender? Because if the plan is to repay from a commercial sale, the money left after GST, agent’s commission and the payout of any first mortgage is what actually clears the loan. Have your accountant confirm the GST position before you lock in an exit strategy.
Illustrative example: a Geelong retailer owns a vacant shop it plans to sell for $1,100,000 and needs $300,000 now for stock. Suppose, for this example only, the lender keeps the advance to 60% of assessed value on a vacant shop, compared with a higher figure it might accept on a leased one. The $300,000 sits comfortably inside that. The exit is the sale: after GST (if the sale is taxable), commission and costs, the net proceeds still clear the loan with room to spare. If the shop is leased up before sale, the property becomes stronger security and easier to sell as an investment.
What about vacant land, rural and mixed-use property?
These sit at the edges and are considered case by case:
- Vacant land depends on zoning, access, services and how close it is to established housing or industry. See vacant land loans.
- Rural property depends on its size, use, water, location and how deep the local buyer pool is.
- Mixed-use buildings, such as a shop with a residence above, are assessed on both parts and on how the whole building would sell.
What documents should I have ready for each type?
For any property, a recent rates notice and insurance details help, and a title search confirms who owns it and what is registered against it. In Victoria the Register records the owner, the land description and encumbrances such as mortgages, caveats and leases; every state keeps an equivalent record.
For commercial and industrial property, add:
- copies of every current lease, including options
- a rent roll or statement showing rent actually received
- a summary of outgoings and who pays them
- any recent notices from council about building compliance or zoning
Having those in the first email is the single biggest thing that keeps a commercial deal moving. When you’re ready, send the property details through and a specialist will tell you how it stacks up.
Whatever the property type, see if you qualify
Tell us what the property is, where it is, whether it’s leased, and exactly what’s owing on it. That’s enough for a specialist to give you a straight answer on how it would be treated as security, without guesswork on either side.
Enquiring doesn’t involve a credit check, your details aren’t sent out to a string of other funders, and a real person reviews every enquiry. House, shopfront or warehouse, the same applies: amounts from $20k to $5m, no formal valuation, and funding possible inside 24–48 hours of documents arriving.
Frequently asked questions
Can I use my home as security for a business loan?
Yes, provided the money is for a business purpose, such as working capital, paying the ATO, buying stock or equipment, or funding a property project. The home is assessed like any other security, and the loan is documented as a business loan.
Is a tenanted commercial property better security than a vacant one?
Usually, if the tenant is solid and the lease has meaningful time left to run. A good lease makes the property easier to sell to investors. A vacant shop or a lease close to expiry is still lendable, but the lender will be more careful about how much it advances.
Does GST matter when commercial property is used as security?
It can matter at the exit. The ATO says a seller of commercial premises is generally liable for GST on the sale price, unless the sale qualifies as a GST-free going concern. If your plan is to repay by selling a commercial property, your accountant should confirm the net proceeds after GST.
What about mixed-use buildings, like a shop with a flat above?
They're common and lendable. The lender looks at both parts: the shop's tenancy and the residence's appeal. The zoning, strata arrangements and how the building would sell as a whole all feed into the assessment.
Are industrial properties treated like commercial ones?
Broadly, yes. Warehouses and factory units in established estates near major roads tend to be well regarded. Highly specialised buildings, or sites with contamination concerns, are approached more cautiously.
Which property type gets funded faster?
Speed depends more on documents than property type. A residential title with clear ownership can move quickly; a commercial title is just as quick if the lease, rent figures and outgoings are supplied up front.