Quick answer
A secured working capital loan uses residential or commercial property as security to fund the day-to-day needs of a business: stock, wages, supplier bills, contract start-up costs and growth. Because the loan relies on property rather than turnover alone, it can be larger and more flexible than unsecured working capital. Loans run from $20,000 to $5,000,000 with interest prepaid or capitalised.
Key points
- Larger amounts than turnover-based unsecured facilities
- No daily or weekly deductions when interest is prepaid or capitalised
- Funds stock, payroll, contracts, deposits and growth
- Repaid from trading, a sale or a refinance
- Flexible term if the cash cycle takes longer
What working capital really pays for
Working capital is the money tied up in running the business between paying out and getting paid. A wholesaler buys stock months before it sells. A builder pays subcontractors weeks before a progress claim clears. A manufacturer buys raw materials, pays staff and carries finished goods while customers enjoy 60-day terms. Every growing business feels the squeeze: the busier it gets, the more cash it needs in the gap.
Most working capital finance is unsecured and sized on turnover, with repayments taken daily or weekly. That suits small, frequent needs. For larger or longer gaps, property security changes the equation. It allows a bigger amount, removes the daily deductions and lets the business repay when the cash cycle completes.
When secured working capital makes sense
- A big contract. A new client or tender that needs materials, labour and equipment before the first payment.
- Seasonal stock. Retailers, wholesalers and importers buying ahead of the busy season.
- Slow debtors. Large customers paying late while staff and suppliers still need paying.
- Growth. Opening a second site, hiring ahead of demand or launching a product line.
- Consolidation. Replacing several unsecured facilities whose repayments are eating the margin.
How it compares
| Feature | Unsecured working capital | Secured working capital |
|---|---|---|
| Sized on | Turnover and bank statements | Property equity and exit |
| Typical amounts | Smaller | $20,000 to $5,000,000 |
| Repayments | Often daily or weekly | Interest prepaid or capitalised; repaid at exit |
| Credit issues | Often a barrier | Considered case by case |
| Speed | Fast for small amounts | As little as 24 hours once documents are signed |
Planning the amount
The right amount covers the full gap, plus a buffer. Map the cash in and out week by week until the cycle completes: when stock is bought, when wages fall due, when invoices are paid. Borrowing too little and coming back for more costs time and money. Borrowing far more than the gap needs adds cost. The equity release estimator shows how much usable equity your property holds; the cash flow plan shows how much of it you should use.
How repayment works
Because interest can be prepaid or added to the loan, there is nothing to repay while the business uses the money. The loan is repaid at the exit. For working capital, the exit is often trading itself: the contract pays out, the stock sells, the debtors catch up. It can also be a refinance into a bank facility once the business has the financial history to qualify, or the sale of an asset.
If the cash cycle runs longer than expected, the loan can stay in place. Raise it early so the extension is arranged calmly.
Map your working capital need with a specialist and get a realistic figure.
An illustrative working capital loan
Illustrative only. An importer of outdoor furniture places its largest order ahead of spring. Goods must be paid for before shipping, and retail customers pay 45 days after delivery. Its unsecured facility is too small and its daily repayments already bite. The directors offer their warehouse as security for a first mortgage that pays the supplier in full and clears the unsecured facility. Interest is capitalised. By late summer the stock has sold through, debtors have paid and the importer repays the loan from the season’s cash, with a far stronger balance sheet than if it had tried to stretch.
Using equity without disturbing your bank
If the property already carries a bank loan you are happy with, a second mortgage or caveat can sit behind it. That leaves the bank loan’s pricing and term untouched and adds a separate, temporary facility for the working capital need. Our guide on using equity for working capital without refinancing explains when that approach works best.
What lenders want to understand
- what the money is for, in plain language
- the timing of the cash cycle and the expected repayment date
- the property, its value and current debt
- any ATO arrears or credit issues, which are assessed case by case
- how the business will avoid needing the same loan again next year
That last point matters. Working capital loans work best when they fund growth or a timing gap. If the business is consistently short of cash every month, it may need a longer-term facility or a pricing review rather than repeated short-term loans.
Questions business owners often ask
Should I borrow the full season’s needs at once? Usually yes, if the property supports it. A single settlement keeps legal costs down and avoids the risk of a second approval failing mid-season.
Can the funds be paid to suppliers directly? Yes. Paying a supplier or the ATO directly from settlement is common and keeps the purpose clear.
What about GST on stock purchases? Factor GST into the amount, then plan for the input tax credit to come back through your BAS.
Signs you have outgrown unsecured facilities
Unsecured working capital is useful, but there are clear signals that a property-secured facility would serve the business better: the amount you need keeps exceeding what turnover-based lenders will offer; you are holding two or more facilities at once; daily repayments are being met by drawing on another facility; or a lender has declined to renew because of a temporary dip. In each case the business is asking unsecured products to do a job they were never designed for.
Put your property to work for the business
If the business is growing faster than its cash, property equity can carry it through. Tell us the need, the timing and the property, and a specialist will size a working capital loan that fits the cycle. There is no credit check when you first enquire, your enquiry is not traded to other lenders, and accurate details on the cash gap help us structure it properly first time. Talk about working capital.
Frequently asked questions
How is secured working capital different from an overdraft?
An overdraft is a revolving bank facility tied to your transaction account and assessed on financials. A secured working capital loan is a lump sum backed by property, assessed on the security and the exit, and usually repaid in one amount.
Can I use a working capital loan to pay suppliers?
Yes. Paying suppliers early, buying stock in bulk and covering creditors while debtors catch up are all common uses.
Do I need to show profits?
Less than with a bank. The focus is the property and how the loan will be repaid, although an explanation of the business's trading helps.
What if I need the money in stages?
Talk to us about the timing. Some deals are structured with the full amount at settlement and interest prepaid on it, others are sized only for the immediate need with a later top-up.
Prefer to start now? Enquire here
About 60 seconds. No credit check when you first enquire, and a secured lending specialist calls you back.