Quick answer
A sole trader can borrow for the business against property held in their own name, or jointly with a partner, by first mortgage, second mortgage or caveat. Because a sole trader and the business are legally the same person, you borrow personally and sign personally. We lend $20k to $5m with no minimum trading period or turnover, and the money must be used for the business.
Key points
- As a sole trader you are the borrower; there's no separate entity to sign for
- Property in your own name, or jointly with a partner, can secure the loan
- No minimum trading period or turnover, so new ABNs can apply
- Thin tax returns aren't a barrier; equity and the exit carry the decision
- Every co-owner signs, and the money must be used for the business
- Borrowers
- Companies, trusts and sole traders, including start-ups — no minimum trading period or turnover
- Amounts
- $20k – $5m
- Purpose
- Business purposes only
- Enquiry
- 60-second loan check — no credit check to find out
Sole traders are the backbone of Australian business: electricians, physios, photographers, consultants, mobile mechanics, landscapers. Many of them also own property, often a home bought before or alongside the business. Yet sole traders are frequently the people banks find hardest to lend to, because their income is irregular, their returns are recent or their records are thin.
A property-secured loan turns that around. The decision rests mainly on the property and how the loan will be repaid, not on how polished your accounts are. This page explains how it works when the borrower is you personally.
How does a secured loan work for a sole trader?
As a sole trader, you and your business are the same legal person. The government’s business.gov.au guidance puts it plainly: you’re “legally responsible for all aspects of your business including any debts and losses and day-to-day business decisions.”
For a secured loan, that means:
- you are the borrower, under your own name, quoting your ABN for the business;
- property in your name (or jointly with a partner) is the security, by first mortgage, second mortgage or caveat;
- there’s no company to sign for and no director guarantee, because there’s no separate entity;
- the money must be used for the business, even though it’s borrowed personally.
Loans run from $20k to $5m against any Australian property type, from homes and rentals to commercial and industrial buildings, rural holdings and vacant land. There’s no minimum trading period or turnover, so a newly registered ABN is assessed on the same footing as one that’s been trading for decades. Brand-new operators can read more on start-up businesses.
Why is the business purpose so important for a sole trader?
Because the line between personal and business money is thinner when you’re a sole trader. ASIC’s guide to the National Credit Code frames its scope around credit used “wholly or predominantly” for private or household needs, or for residential investment. Money borrowed to run your trade falls outside that, and business use is the only purpose we lend for.
Expect to sign a short declaration stating what the funds are for. The simplest way to keep it clean is to pay the funds into your business account and spend them on business costs: stock, tools, a vehicle, a fit-out, a tax bill or wages.
What property can a sole trader offer?
| Property | How it usually works | Who signs |
|---|---|---|
| Home in your sole name | First mortgage if debt-free, or second mortgage or caveat behind the home loan | You |
| Home owned jointly with a partner | As above | You and your partner |
| Rental property in your name | Often the cleanest option; keeps the home out | You |
| Your business premises | Commercial or industrial security | You |
| A parent’s or relative’s property | Third-party security for your loan | That owner, after independent advice |
The lending ceiling is 80% of value for residential property and 70% for commercial, with large acreage lower, and any loan already on the title counts towards it. Our page on residential property as security explains how different homes and units are judged.
What do you need to apply as a sole trader?
Far less than a bank asks for. The essentials are:
- Photo ID for you and every co-owner of the property.
- Your ABN, so the business purpose is clear.
- The latest statement for any loan secured on the property.
- A rates notice or other details that identify the property.
- What the money is for, in a sentence or two.
- How it will be repaid: a sale, a refinance, a contract payment or business income building over the term.
Recent tax returns and BAS help if your exit is a bank refinance, because the bank will want them, but they aren’t required before a property-secured loan can proceed. Our documents for a private mortgage guide covers each item. When you’re ready, start with the 60-second check.
Does bad credit or ATO debt stop a sole trader borrowing?
No. A damaged file, an old default or money owed to the ATO is weighed up as part of the picture rather than treated as an automatic no. For sole traders this matters, because tax debts are personal debts and late lodgements are common in the early years. Clearing an ATO debt is itself one of the most common reasons sole traders borrow against property.
What are the risks for a sole trader, and how do you keep them small?
The main risk is simple. business.gov.au notes a sole trader structure “has unlimited liability and all your personal assets are at risk if things go wrong.” A property-secured loan adds a specific asset, usually your home or a rental, as security for a business debt. If the exit fails, that property is what the lender looks to.
Keep the risk proportionate by:
- borrowing what the business needs, not the maximum the property allows;
- offering a rental rather than the home where you can;
- naming a firm exit and a fallback before you sign;
- making sure your partner understands the loan if they co-own the property;
- repaying early when the exit arrives: open terms mean you can repay anytime with no penalty.
Illustrative example: a mobile mechanic expands to a workshop
Illustrative only: a made-up sole trader with round figures.
A Townsville mobile mechanic has traded as a sole trader for eighteen months and has more work than one van can handle. He needs $150k for a workshop lease bond, a hoist, diagnostic equipment and a second van. His bank wants two full years of returns.
He and his partner own their home jointly, assessed at around $650k with $320k owing. Illustrative: at an 80% residential limit, total debt on the home could reach $520k, leaving up to $200k of room behind the bank. A second mortgage for $150k is arranged; his partner signs after independent legal advice. With interest capitalised there are no repayments in the first 6 months, giving the workshop time to build a customer base, and the exit is a bank refinance once he has two years of returns.
What changes if you later move to a company?
Many sole traders incorporate as they grow. If that happens during the loan, the business’s assets and contracts may move to the new company, but the loan and the security stay as they are until they’re changed. Tell us early, so we can talk through whether anything needs updating. Your accountant is the right person to advise on the structure itself.
Trading on your own ABN? See if you qualify
Running a business on your own takes nerve, and the bank’s checklist rarely reflects how good your business actually is. If you own property, it can do the talking instead.
Checking takes roughly a minute, and because no credit check is run when you enquire, nothing appears on your file for asking. We’re the direct lender, so your details won’t be sprayed across a panel of lenders and you won’t be fielding calls all week. A real specialist looks at your situation and calls you. Please fill in the property and debt details accurately so the first answer you hear is one you can rely on.
Frequently asked questions
Can a sole trader get a secured business loan?
Yes. A sole trader can borrow against property in their own name or held jointly with a partner. There's no minimum trading period or turnover, and the decision rests mainly on the property's equity and how the loan will be repaid.
Do I need two years of tax returns?
No. Tax returns help if your exit is a bank refinance, because the bank will want them later, but they aren't a gate for a property-secured private loan. What we need is the property details, what's owing, your ID and ABN, the purpose and the exit.
My partner co-owns the house but isn't in the business. Can we still use it?
Yes, if your partner agrees. Every registered owner signs the mortgage. Your partner should get independent legal advice first so they fully understand that the home secures a business debt.
I've only just registered my ABN. Is that too new?
No. There's no minimum trading period. A new sole trader with property equity and a clear plan to repay can apply from day one.
Should I set up a company before I borrow?
That's a question for your accountant, and it doesn't need to hold up the loan. If you change structure later, tell us, because the borrower and the security documents may need updating.
Can I use the loan for personal expenses too?
No. The loan is for business purposes only. Keeping the funds in a business account and paying business costs directly from it makes the purpose clear.