Quick answer
A secured working capital loan is a short-term private loan, backed by a first mortgage, second mortgage or caveat over property, that funds the cash a business needs between paying for stock, wages and suppliers and getting paid by customers. Amounts run from $20k to $5m. Interest can be prepaid or capitalised, so the loan needn't drain monthly cash flow, and it's repaid from receipts, a refinance or a sale.
Key points
- Funds the gap between paying out and getting paid, secured on property rather than stock or debtors
- Interest can be prepaid or capitalised, so no monthly repayments need come out of trading cash
- Sized from your cash cycle, not a guess, and repaid from a defined exit
- A set amount for a set term, not a revolving line of credit
- Amounts
- $20k – $5m
- Interest
- Can be prepaid or capitalised
- Speed
- 24–48 hours possible once documents are in
- Security
- Residential, commercial or industrial property
Profitable businesses run out of cash all the time. Not because they’re losing money, but because the money they’ve earned is sitting in unpaid invoices, warehouse shelves and contract milestones while wages, rent and suppliers want paying now. That gap between cash out and cash in is working capital, and when it outgrows the overdraft, property you own can fund it.
What is a secured working capital loan?
It’s a private loan for a business purpose, secured on residential, commercial or industrial property, that pays for the trading gap: stock, wages, super, materials, supplier accounts and the other costs you carry before customers pay. The property is the security; the business’s trading cycle provides the exit.
At a glance
- Amounts: $20k to $5m.
- Structures: private first mortgage, second mortgage behind your bank, or caveat loan.
- Term: first mortgages 1 to 24 months; seconds and caveats typically shorter.
- Interest: can be prepaid or capitalised, so trading cash isn’t drained monthly.
- Speed: funding within 24–48 hours possible once documents are in; $20k–$250k property-secured possible the same day.
- Assessment: no formal valuation required; ATO debt and credit history considered case by case.
How much working capital do you actually need?
Borrowing too little means coming back in a month; borrowing too much means paying for money you don’t use. The cash cycle gives a defensible number.
| Step | What to measure | Where to find it |
|---|---|---|
| 1. Debtor days | Average days from invoice to payment | Aged debtors report |
| 2. Stock days | Average days stock sits before it’s sold | Stock and sales reports |
| 3. Creditor days | Average days you take to pay suppliers | Aged creditors report |
| 4. Cash cycle | Debtor days + stock days − creditor days | Your accountant |
| 5. Daily outgoings | Wages, super, rent, materials ÷ trading days | Profit and loss |
| 6. Working capital need | Cash cycle × daily outgoings, plus a buffer | The loan amount to test |
A business with a 70-day cash cycle and $4k of daily outgoings is carrying about $280k before customers pay. If the overdraft covers $150k, the gap to fund is around $130k plus a buffer for slow payers. Your accountant can refine this, and the lender will want to see the reasoning, not just the number.
The purpose-level detail, such as seasonal peaks and one-off contracts, is covered on the working capital purpose page.
Why secure working capital on property, not stock or debtors?
Most working capital products lend against the very things that are tied up: stock (inventory finance) or receivables (invoice finance and factoring). That works, but it has costs:
- Your customers can become involved. Factoring companies buy your invoices at a discount and collect from your debtors, as business.gov.au describes it.
- Advance amounts shrink with the asset. Slow sales or a disputed invoice can reduce what you can draw just when you need more.
- Your best assets get encumbered, making a later bank facility harder.
Property sits outside the trading cycle. Lending against it leaves stock and debtors free, keeps the arrangement private, and lets you size the loan to the gap rather than the ledger.
How does a secured working capital loan compare?
| Secured working capital loan | Bank overdraft | Invoice finance | Unsecured online loan | Trade credit | |
|---|---|---|---|---|---|
| Rests on | Property equity and exit | Financials and security | Unpaid invoices | Bank statements | Supplier relationship |
| Size | $20k–$5m | Set by bank policy | Tied to the ledger | Usually smaller | Supplier’s limit |
| Repayments | Can be none during term | Interest monthly | Deducted from collections | Often daily or weekly | Due on terms |
| Speed | 24–48 hours possible | Weeks for new limits | Days | Days | Negotiated |
| Customer involvement | None | None | Possible | None | None |
| Best for | A defined gap with property equity | Ongoing small swings | Large, reliable debtors | Small, quick needs, no property | Routine purchasing |
If you’re weighing up a revolving line against a set-term loan, the line of credit vs secured short-term loan guide sets out the trade-offs honestly; this isn’t a line of credit, and for ongoing swings a bank line may be the better tool.
Why does capitalised interest matter for working capital?
Because a working capital loan that takes a monthly repayment out of the business partly defeats itself. With interest capitalised, nothing is paid during the term and the interest is settled from the exit. With interest prepaid, it’s deducted upfront and the loan runs without repayments. Either way, every dollar released can go into trading. The mechanics are in prepaid or capitalised interest and the capitalised interest glossary entry.
What are the risks, and how do you keep them small?
Working capital loans fail in predictable ways, and almost all of them are about timing rather than the property.
| Risk | What it looks like | How to manage it |
|---|---|---|
| Receipts arrive late | The big customer pays at 90 days, not 60 | Build a buffer into the term; don’t set the due date on the best-case receipt |
| The gap was a loss in disguise | The loan is used up and the business is short again | Check margins with your accountant before borrowing |
| Growth keeps going | Success needs more cash than planned | Plan the refinance to a bank facility early, while the numbers look strong |
| Stacked lending | A daily-debit online loan sits alongside the secured loan | Use part of the secured loan to clear the expensive debt first |
| Caveat time limits | A caveat on the title runs longer than the state’s usual life for one | Convert to a registered second mortgage or choose that structure from the start |
The common thread is honesty about the exit. If the cash forecast only works when every customer pays on time, it isn’t a forecast yet. If the loan needs to run longer than planned, talk to the lender before the due date, when an extension or conversion is still straightforward.
How does it work?
- Enquire in 60 seconds: property, debts on it, amount, what it funds and how it’ll be repaid. No credit check.
- Specialist review: a call to test the cash cycle and the exit.
- Letter of Offer: amount, term, interest option and assessment fee.
- Sign: your solicitor reviews; identity is verified for every owner.
- Settlement: funds go to your business account or straight to suppliers, the ATO or payroll.
- Exit: receipts, a refinance or a sale repays the loan, and the security comes off.
Who suits a secured working capital loan?
- Growing businesses whose sales are outrunning their overdraft.
- Contractors carrying wages and materials until progress claims are paid. See fund a big contract.
- Seasonal traders building stock ahead of a peak. See stock and inventory.
- Employers adjusting to Payday Super. From 1 July 2026, contributions generally need to reach the fund within seven business days of payday. See cover Payday Super and payroll.
- Businesses waiting on slow payers. See late-paying customers.
- Importers and wholesalers with long supply chains; the wholesale and import page covers their cycle.
When isn’t it the right move?
- When the business is losing money. Working capital funds timing gaps, not losses. Borrowing to cover recurring losses puts the property at risk without fixing anything.
- When an overdraft increase is available in time. A bank facility will usually cost less for ongoing swings.
- When the gap is permanent. If customers will always pay in 60 days, the long-term answer is a bank facility or invoice finance arrangement sized for it, with this loan, at most, as the bridge.
- When the ATO would take a manageable plan. The ATO notes plan balances keep accruing general interest charge, compounding daily, so compare totals with your accountant.
Documents you’ll need
- Photo ID for every owner, director and guarantor.
- ABN or ACN, and trust deed where relevant.
- Property details and statements for any loans on it.
- Aged debtors and creditors reports, or the contract and payment schedule.
- A simple cash forecast showing how the loan is repaid.
How fast is it?
Funding within 24–48 hours is possible for up to $5m once documents are in, and $20k–$250k property-secured is possible the same day. A clean forecast and current statements for any existing loans are what keep it quick.
What it costs (without the guesswork)
Each loan is priced on its security, LVR, term and exit, aiming for the sharpest price your situation allows. Expect interest (prepaid or capitalised), a small assessment fee that varies per loan and is shown on the Letter of Offer, legal and registration costs, and discharge costs. A second mortgage or caveat generally costs more than a first mortgage because the lender ranks behind the bank. The term is your biggest lever: fund the cycle, not a year of comfort.
Illustrative example (net funds): a Western Sydney joinery business wins a fit-out contract with 60-day payment terms and needs $300k to carry wages, Payday Super and materials. The owners’ factory unit is worth about $1.1m with $420k owing. Illustrative: lending to a combined 65% of value allows total debt of $715k, giving $295k of headroom behind the bank, so the request is set at $290k.
- Loan: $290k second mortgage for 6 months
- Interest: capitalised, paid from the contract receipts at the end
- Less assessment fee and legal costs: about $9k
- Working capital released: about $281k
- Exit: the second and third progress payments, then a bank overdraft increase once the contract shows in the accounts Local detail for that region is on the Western Sydney and Parramatta page, and the broader structures are on secured business loans and second mortgage business loans.
Cash tied up in the trading cycle? Start your enquiry and test the numbers with a specialist.
Trading well but short on cash? See if you qualify
Give us the basics: the property, what’s owed on it, how much working capital you need, what it funds and when the cash comes back. No credit check is run to enquire, your details aren’t passed around a group of lenders, and a real specialist reads the file and gives you a straight answer, including whether a bank facility would serve you better.
Precise answers about the property and existing debts mean the first answer is the right one. See if you qualify in about a minute.
Frequently asked questions
We've won a contract that doubles our turnover, but the first payment is 75 days after we start. Can we borrow against our office to carry the costs?
That's a classic working capital gap, and a loan secured on the office can fund it. The lender will want the contract, the payment terms and a simple cash forecast showing when receipts start to exceed costs. The first two or three progress payments are usually the exit.
Our overdraft is maxed out and the bank won't increase it. Can a secured loan sit alongside it?
Yes. A second mortgage or caveat loan can sit behind the bank's security on a property, leaving the overdraft in place. Check the bank's facility terms with your solicitor, because some restrict further borrowing against the same property.
How do I work out how much working capital I actually need?
Start with your cash cycle: how many days of costs you carry before customers pay, minus how long suppliers give you. Multiply your daily outgoings by that number of days, then add a buffer for slow payers. Your accountant can run it from your aged debtors and creditors reports.
I'm a wholesaler and peak season stock is due from overseas next month. Can I use my home as security?
For a business purpose, yes, property including a home can secure the loan. Think carefully about the risk to the home, involve everyone on the title and make sure the sell-through of that stock comfortably repays the loan. The lender will ask for the order, the landed cost and last season's sales.
Can I draw the money as I need it, like a line of credit?
No. A secured working capital loan here is a set amount advanced at settlement for a set term, not a revolving facility. If you need ongoing flexible access, a bank overdraft or line of credit may suit better once your financials support it.
With Payday Super, our super now goes out every pay cycle. Is that a reason for a working capital loan?
It can tighten cash flow, because from 1 July 2026 contributions generally need to reach the fund within seven business days of payday instead of quarterly. If the business is profitable but the timing hurts during a growth phase, a short secured loan can smooth it. If the business simply can't afford its wage bill, a loan won't fix that.
Do I have to make monthly repayments on a working capital loan?
Not necessarily. Interest can be prepaid at the start or capitalised and paid at the end, so there may be no monthly repayments during the term. That's often the point of a working capital loan: cash stays in the business while it's needed.
Will the lender take our debtors or stock as security?
No. The loan is secured on real property, not on stock, equipment or receivables. That means your debtors stay unencumbered, which can matter if you later use invoice finance or a bank facility.
We had a bad year and have ATO arrears. Can we still get working capital?
Possibly. ATO debt and a weak year are considered case by case, and the equity and exit carry more weight than the last tax return. Some owners use part of the loan to clear the ATO debt and the rest as working capital, which can be a cleaner position for a later bank refinance.
How long can a secured working capital loan run?
Private first mortgages can run from 1 to 24 months; second mortgages and caveat loans are typically shorter. The term should match the cycle you're funding, such as a season, a contract stage or the time until a refinance.
Is it cheaper to use invoice finance than a property-secured loan?
It depends on how long you need the money and how many invoices you'd fund. Factoring buys invoices at a discount and can be quick, but it can cost more than traditional finance and involves your customers. A short secured loan costs interest plus a fee and keeps your debtor relationships private.
Can I get working capital if my business is only a year old?
Yes, if there's property security and a believable exit. A short trading history matters less when the decision rests on equity, though the lender will want to understand how the business will repay.
Do I have to pay for a report on the property I'm offering?
No. There's no formal valuation required, so there's no report to pay for; the lender assesses the property itself. You just need to provide accurate details of the property and what's owing on it.