Commercial property second mortgage for business: how much equity can your company release?

A lot of company directors own the one asset a bank should love, and still get told no. The workshop, the depot, the shopfront with the roller door: it’s sitting there with a mortgage on it, and the director assumes there’s nothing left to borrow against.

Often there is. This guide shows how a credit manager counts the equity in commercial premises your company already owns, what changes when the bank holds the first mortgage, and what actually slows these loans down. It won’t be the equity.

How much equity can a company release from commercial property?

Start with the arithmetic, because it’s simpler than most people expect.

1. Take a realistic value for the property.
2. Apply the lending cap. For commercial property, Company Cash lends up to 70% of value in total, meaning your existing mortgage plus the new one. (Residential is up to 80%.)
3. Subtract what you currently owe on the property.

What’s left is the ceiling, not the loan. Company Cash lends $20,000 to $50,000, so the question isn’t usually “is there enough equity?” It’s “is there enough, with some room to spare, and is everything else in order?”

A worked example

This is an illustration, not an offer. A Pty Ltd company runs a refrigeration and air-conditioning business out of a unit in an industrial estate in Dandenong. The company owns the unit, and the bank holds the first mortgage.

Step	Figure
Realistic value of the unit	$900k
70% commercial cap	$630k
Owing to the bank	$450k
Ceiling on all borrowing	$180k left

A $40k facility uses about a fifth of that headroom. The director isn’t stretching the property; the structure is comfortable. If the same unit were worth $700k with $450k owing, the ceiling would be $40k, and a $40k loan would leave no buffer. That file looks very different on a credit manager’s desk, even though the borrower and the business haven’t changed.

Make it count: Work out your own ceiling before you ring anyone, using the property equity and LVR calculator. Use the conservative end of your value range, not the hopeful end.

Why does a lender look at the premises instead of trading income?

Because the two answer different questions. A cash flow lender asks, “Can this business service the repayments from its profit and its statements?” That’s a fair question, and plenty of sound companies fail it: a lumpy year, a new contract not yet reflected in the numbers, too many existing loans, a credit mark from a bad patch.

A property lender asks a different one: “If things go sideways, is there enough value behind this loan, and is the way out believable?” That’s why no cash flow records, financial statements or tax returns are needed. If you’ve been told that your numbers aren’t strong enough, the guide on what to do after a cash flow lender says no covers the first 48 hours, and how serviceability caps your borrowing explains why good businesses hit that ceiling.

None of this means the business is irrelevant. The assessor still asks what the money is for and where repayment comes from. They’re just not demanding a clean two-year profit history to get there.

If your company already owns premises and you’d like a straight answer on what it might release, you can check your options in about 60 seconds and read the rest afterwards.

What does it mean when the bank already holds the first mortgage?

It means a second mortgage ranks behind the bank’s. If the property were ever sold to repay debts, the bank gets paid first, then the second mortgagee. That’s why lenders cap total borrowing at 70% for commercial property: a buffer for the sale price coming in lower than expected, and for the costs of selling.

Three practical things follow from that.

The bank’s contract may have its say. Many first mortgage documents include a clause that restricts further borrowing against the property without the bank’s agreement. Whether that clause exists, and what it says, is a question about your contract, so check it first, and ask your solicitor if the wording isn’t clear. Registration rules have moved on in several states in recent years, but a contractual restriction is a different thing from a registration rule. Breaching it can be treated as a default under your bank loan.

The bank may keep lending against the property. If your bank facility has a redraw, an overdraft or a line that can be topped up, those extra advances can sit ahead of the second mortgage. A careful lender asks whether the facility is fixed or can grow, and your honest answer shapes the file.

Be upfront about the bank loan itself. If the first mortgage is in arrears or the bank has sent a default notice, say so at the start. It changes the exit and the speed. It doesn’t automatically close the door, but surprises do.

For a plain comparison of the tools, see second mortgage or caveat loan, and the second mortgage hub page for how they work at Company Cash.

How do lenders treat workshops, depots and shopfronts differently?

Not all commercial premises are equal, and the lender knows it. Specialised properties are harder to resell than generic ones. A purpose-built car wash is a narrower market than a plain industrial unit. A shopfront in a quiet strip is harder to move than a corner site with foot traffic.

The wider market matters too. NAB’s Q3 2026 commercial property survey, published on 19 October 2026, found property professionals expecting capital values to fall over the next 12 months for retail (-1.3%) and office (-1.0%), while industrial values are expected to rise 1.2%. Those are survey expectations, not valuations of your building, and they won’t decide your file. But they explain why an assessor may be a touch more cautious on a retail strip than on a warehouse unit, and why a conservative value from you is better received than an optimistic one.

Here’s roughly how the common types tend to be viewed:

• Workshop or industrial unit: Generally the easiest to understand, as the market is deep and the uses are flexible. A company that owns the unit and trades from it is a familiar picture.
• Depot or yard: Value often depends on zoning, access and the land itself. If the depot is mostly hardstand, expect questions about what else the site could be used for.
• Shopfront or café premises: Value is tied to the location and the tenancy. Owner-occupied is cleaner. If a tenant is paying rent, the lease term and the tenant’s standing matter.
• Mixed-use building: A shop below and a flat above can sit in both camps. Say which part is commercial and which is residential, because the percentages differ.

Owner-occupied or leased out: does it change anything?

Yes, in how the lender reads the property. A building your own company trades from is tied to the business, so a lender knows you have every reason to look after it. A building leased to a third party brings the tenant into the picture: how long is the lease, who is the tenant, is rent paid on time?

Neither is a problem. They’re just facts to put on the table early. If the premises are leased to a related business of yours, say that clearly too. It’s common, and fine, but it should be disclosed rather than discovered.

What if the property isn’t owned by the borrowing company?

This is more common than you’d think. The company runs the business, but the premises sit in a family trust, in a director’s personal name, or in a related company. Security can sometimes still be offered by another party, but it adds steps:

• The registered owner has to agree to provide the security.
• If it’s a company or trust, the right people need authority to sign, and the constitution or trust deed has to allow it. ASIC’s guidance on running a company is a good place to refresh what directors can and can’t do on the company’s behalf.
• A guarantee from a director is common, so read what you’re signing. Our page on director guarantees and security explains what’s usually asked.

This is where settlement dates blow out. Each extra signatory is an extra day, so gather the details first and mention the structure in your enquiry. None of this is legal advice; your solicitor should review anything you sign.

What actually slows a commercial second mortgage down?

After sitting through enough credit meetings, the delays group into a handful of causes, and almost none of them is “not enough equity.”

1. Authority to sign. Who has to sign for the company, and are they all available? A director overseas or a partner who’s not talking to you will stall a file for days.
2. A first mortgage restriction nobody checked. Discovered late, it forces an awkward call to the bank.
3. Title surprises. An old caveat, an easement that affects use, or a name on title that doesn’t match the company’s.
4. A vague exit. “I’ll sort it out when the money comes in” is a sentence assessors hear daily and rarely accept without detail.
5. Inconsistent information. An address that differs between documents, or a value you quoted on the phone that doesn’t match your written answer.

Several of these you can fix in an afternoon. A recent bank statement showing your first mortgage balance, the current title details, and a simple written note of how the loan will be repaid cover a lot of ground. The business loan documents page lists what’s commonly asked, and a 30-day preparation plan helps if you have time.

How should you plan the exit on a property-secured loan?

The exit is how the loan gets repaid, and it’s the question that decides most files. Property-secured loans of this kind are short-term, with up to three months of prepaid interest and then weekly repayments, so the exit needs to be specific and dated. The usual routes are repaying from incoming cash flow, or refinancing the property or another business asset.

Good exits are concrete: a contract with a payment date, an invoice run, a sale of surplus equipment, or a refinance already being scoped with a broker or bank. Weak ones are hopeful: “business should pick up.”

Make it count: Write your exit in three sentences before you apply. What’s the source of repayment, when does it arrive, and what’s the plan B if it’s late? Then read it back as if you were the assessor. The exit strategies page goes deeper. Cash-flow planning basics are also covered on business.gov.au.

Should a commercial property loan be second mortgage, caveat or something else?

It depends on the situation, and the honest answer is sometimes “something else.”

• Second mortgage: Suits when the property has clear headroom behind a first mortgage and you want a registered, formal arrangement.
• Caveat loan: Can be faster and lighter on paperwork, and is often used for shorter needs. It has its own risks, which the second mortgage vs caveat guide sets out.
• Refinancing the bank loan: If the first mortgage is the problem, and its terms are working against you, refinancing might beat adding a second layer of debt. A second mortgage is a bridge, not a cure.
• Cash flow lending: A minor part of what Company Cash does, and not usually the answer if a cash flow lender has already said no.

For bigger needs, the right structure may be combining facilities, and that’s a conversation rather than a formula. If you’re weighing the models, cash flow or property: which lending model fits walks through it.

What do you do before you apply?

A short checklist, in order:

1. Pull the current title search and confirm the registered proprietor’s name matches who will be borrowing or giving security.
2. Find your first mortgage contract and read what it says about further borrowing.
3. Get your current mortgage balance from the latest statement.
4. Gather one or two value markers: a bank valuation if you have one, recent comparable sales, a council valuation notice, or an agent’s appraisal.
5. Check the PPSR for any security registered against the company’s other assets, since it shows what else is already pledged. The Personal Property Securities Register is the national public register.
6. Write your exit in three sentences.
7. Confirm who signs for the company and that they’re reachable that week.

If you can tick most of these, the file is easy to read, and a tidy file moves fastest.

Your company already owns the premises. Let’s see what it can do for you.

A company that owns its workshop, depot or shopfront has built something real, and it’s frustrating when a lender who only reads statements can’t see it. We look at the property and the plan to repay, not at a stack of cash flow records. Bad credit, defaults and ATO debt are considered, and the premises do the heavy lifting.

Enquiring takes about a minute, and there’s no credit check when you enquire, so asking costs you nothing on your credit file. We don’t send your details to a pile of lenders, so your phone won’t light up with strangers. A real person looks at your individual situation and calls you to talk it through. All we ask is that you fill the form in accurately, including who owns the property and what’s owing on it, so we can match the right option first time.

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