Keeping the family home out of your business borrowing

Why do so many owners want to keep the house out of it?

Because the house isn’t just an asset. It’s where the family lives. Plenty of owners have watched a friend or parent lose sleep over a business loan with the home on the line, and they’ve quietly decided it won’t be them.

It’s a sensible instinct, and it’s more common than lenders sometimes admit. The RBA’s October 2025 Bulletin listed security demands (property or personal assets) as the obstacle small businesses raised more than any other. Many of those owners do own homes. They just don’t want the business borrowing against one.

What does choosing unsecured actually cost you?

Honesty first: keeping property out usually changes the shape of the deal, not whether a deal exists.

	Unsecured (home stays out)	Property-secured (home used)
Typical amount	$5,000 to $500,000	$20,000 to $5,000,000
What sizes the loan	Turnover and bank statements	Property value and equity, plus the business
Typical term	Shorter	Can be longer
What’s registered	Often nothing, or a security interest over business assets	A mortgage or caveat on the property title
Personal guarantee	Usually yes	Usually yes

The RBA noted that new home-backed business loans average roughly four and a half times the size of loans secured another way. That’s the clearest picture of the trade-off: property security buys size. If your need fits inside what your turnover supports, you don’t have to buy it.

Is a personal guarantee just a mortgage by another name?

No, and the difference matters. business.gov.au’s glossary treats collateral as an asset the lender can claim if repayments stop, and a guarantor as someone legally on the hook to repay when the borrower doesn’t.

• A mortgage or caveat is recorded against a specific property. It gives the lender a registered claim on that asset.
• A guarantee is a personal promise. It isn’t recorded on your home’s title. If the business defaults and the guarantee is called on, the lender pursues you personally, which in a worst case can still reach personal assets through the normal recovery process.

So a guarantee is lighter than a mortgage, but it isn’t nothing. Our page on guarantees and general security agreements explains what to check before you sign.

Which unsecured options work best when the home stays out?

Different needs suit different tools:

• A short-to-medium unsecured term loan for a one-off cost with a clear payback, like a fit-out or a large stock order. See unsecured business loans.
• A line of credit for ongoing cash-flow gaps, where you only pay for what you draw.
• Invoice finance if customers owe you money on 30 to 60 day terms. The invoices do the heavy lifting.
• Equipment finance, where the machine, vehicle or fit-out item secures itself.

Stacking the right tool against the right cost is how owners grow a long way without touching the house. Our guide to building a funding ladder without property lays out the sequence.

Want to know what your figures support before deciding anything? Send a quick enquiry and a specialist will talk it through.

What will the lender ask if you own a home but won’t use it?

Expect a straightforward question or two. A lender may ask whether you own property because homeowners often have more stable personal finances, and a guarantee from a homeowner carries more weight. That’s normal. Answering “yes, but I’m not offering it as security” is a perfectly acceptable reply.

What you shouldn’t do is leave property off the form to seem like a renter. Accuracy protects you: we can only point you to the best path when we know the full picture, including the paths you’ve ruled out.

When might you revisit the decision?

Circumstances change. Owners sometimes reconsider when:

• the opportunity is well beyond the unsecured ceiling, such as buying out a partner or a competitor;
• the business needs a longer term to keep repayments comfortable;
• the unsecured facilities already in place are crowding out cash flow.

If that day comes, the page on outgrowing unsecured finance sets out the signs. Until then, there’s no pressure from us to change your mind.

How do you talk about this with a co-owner or partner?

If you own your home with a spouse or partner, the decision to keep it out of business borrowing is usually a shared one. A few points make the conversation easier:

• Be clear about what “unsecured” involves: no mortgage on the house, but usually a director’s guarantee.
• Share the numbers: the amount, the repayments and how the business will carry them.
• Agree on a ceiling: the level of borrowing you’re both comfortable with before revisiting the decision.
• Keep them informed as the business grows, so any future change isn’t a surprise.

Owners who have this conversation early tend to borrow more calmly and make better decisions under pressure. It also means that if a larger opportunity ever arrives, the discussion starts from shared understanding rather than from scratch.

Keep the home out and still get a real answer

Tell us what you need and say plainly that property is off the table. Nobody runs a credit check when you first enquire, your enquiry stays with one team instead of being blasted across the market, and a real person calls you to talk through what your turnover can support.

Please be accurate on the form, including whether you own property and just don’t want to use it. It helps us get the recommendation right the first time. Start your enquiry.