The pros and cons of taking a business loan
A property-secured business loan is worth taking when the money solves a timing problem with a dated exit, and worth refusing when the business is losing money structurally. HomeSec declines files on that second basis regularly. Borrowing at private rates against a family home to cover a structural loss makes the eventual outcome worse rather than better.
Most articles with this title are written by lenders and reach the conclusion that you should take a business loan. Here is a more useful version, from a lender that declines files regularly.
When borrowing is clearly the right call
A dated gap. Money you are owed has not arrived and money you owe is due. The gap has a beginning and an end and you can point at both. This is the strongest case there is, because the loan is repaid by an event that was always going to happen.
A purchase that changes the economics. Discounted stock, plant at auction, a competitor’s assets, a partner’s share. The thing you buy pays for the borrowing.
Removing a more expensive liability. An ATO balance is the clearest current example — since 1 July 2025 the General Interest Charge has not been tax deductible, while interest on business borrowing generally remains so.
A deadline with a real consequence. A wind-up notice, a Director Penalty Notice, a settlement with penalty interest running. The cost of borrowing is being compared against the cost of the thing happening.
When it is clearly wrong
A structural loss. If the business loses money on every job, borrowing does not fix it — it converts a business problem into a personal one and delays the reckoning. This is the file we decline most often, and we would rather do it in the first ten minutes than after you have paid us anything.
No identifiable exit. “Things should pick up” is not an exit. A loan with no exit becomes an enforcement problem, and enforcement against your property is the outcome nobody wants.
Hope about a receivable. A debtor who has not paid for ninety days is not a repayment plan. If the exit depends on someone else changing their behaviour, it is not dated and it is not documented.
The honest costs
Property-secured private lending is more expensive than a bank and it is priced that way for a reason — speed, no valuation, no financials, and a willingness to look at files a bank will not. Whether it is worth it depends entirely on what the alternative costs.
The number to compare is total dollars over the period you actually need the money, including every fee, against the cost of the thing you are avoiding. Not monthly rate against monthly rate.
The question to ask any lender
What would make you say no to this?
A lender with no answer is not underwriting anything, and a lender who never says no is not protecting you from a loan you should not take. Our answer is above.
Reviewed by Catriona Anderson, General Manager