When your business is ready to grow, funding the next step is often the hardest part. One of the most cost-effective ways to raise capital is also one of the most overlooked: the equity you’ve already built in property. Used well, equity finance is usually cheaper, more flexible and higher-limit than an unsecured business loan. Here’s how it works, how to structure it, and what to weigh up before you borrow.
What is equity — and how much can you actually use?
Equity is the difference between what your property is worth and what you still owe on it. But you can’t borrow against all of it. Lenders generally let you access up to 80% of the property’s value minus your current loan — going above 80% usually triggers Lenders Mortgage Insurance (LMI).
A quick example:
- Property value: $900,000
- 80% of value: $720,000
- Less current loan: $400,000
- Usable equity: ~$320,000
That equity can sit in your home, an investment property, or your commercial premises — and it becomes capital you can put to work.
What business owners use it for
- Fitting out or opening a second location
- Buying equipment, vehicles or stock
- Hiring and onboarding staff ahead of growth
- Funding a large order or contract
- Acquiring a competitor or buying into a partnership
- Building a cash-flow buffer for lumpy revenue
Why use equity instead of an unsecured business loan?
Because the loan is secured against property, equity finance typically comes with lower interest rates, longer repayment terms and higher borrowing limits than unsecured lending. Unsecured loans are faster and need no property, but you pay for that in higher rates and smaller amounts. If you have equity available and a little time to arrange it, it’s usually the cheaper path to growth capital.
Ways to structure it
There’s no single “right” way — it depends on how much you need, when, and how you’ll repay:
- Loan top-up / increase — if you’re happy with your current lender, increasing your existing loan is often the quickest route.
- Refinance with cash-out — move to a lender offering a better rate and higher amount, freeing a lump sum to reinvest.
- Line of credit — a revolving facility secured by your property; draw only what you need and pay interest only on what you use. Ideal for staged spending or a buffer.
- Private / second-mortgage funding — where speed matters or the numbers don’t fit a bank, a private lender can move faster (at a higher cost).
What lenders will look at
Even though it’s secured, lenders still assess:
- Serviceability — can the business (and you) comfortably cover repayments?
- Purpose — a clear, sensible business use for the funds
- Your equity position — staying at or under 80% avoids LMI
- Records — if self-employed, expect to provide business financials and tax returns (low-doc options exist if your paperwork is behind)
Using equity wisely (the risks)
It’s powerful, but you’re putting property on the line, so approach it strategically:
- Don’t over-leverage — borrow to a level the business can service even if conditions tighten
- Plan repayments on conservative forecasts, not best-case ones
- Interest on funds used for genuine business purposes may be tax-deductible — confirm the treatment with your accountant
- Structure business and personal debt so one doesn’t jeopardise the other
Talk it through first
The right structure can free up significant growth capital at a fraction of the cost of unsecured finance — the wrong one can strain both your business and your household. As Brisbane commercial finance brokers, we compare options across a wide panel of lenders, model scenarios against your goals, and structure equity finance that supports growth without over-extending you. Contact The Brokerage to explore what your equity could unlock.