Asset-backed lending

Every loan decision comes down to one question for the lender: should the borrower stumble, what covers the shortfall? Asset-backed lending answers it with something tangible. The business pledges specific assets as collateral, and the lender sizes the loan mostly around what those assets would fetch.

Two ways a lender can say yes

Business lenders broadly lean one of two ways. Cash-flow lenders look at earnings, bank statements and serviceability, and may take only a general security or a director’s guarantee. Asset-backed lenders start with the security and work backwards.

	Cash-flow lending	Asset-backed lending
Main question	Can the business afford the repayments?	What is the security worth, and can we sell it?
Limit set by	Turnover and profit	A percentage of the asset’s value
Suits	Profitable, steady businesses	Asset-rich businesses with uneven earnings or credit marks
Typical products	Unsecured business loans, overdrafts	Property loans, asset finance, invoice finance

Banks blend both, and when you tick their boxes they’re usually the cheapest source of asset-backed money around. It’s when a bank declines, or can’t move fast enough, that specialist and private asset-backed lenders come into their own.

What each asset is good for

Lenders apply a different advance rate to each kind of security, reflecting how easily it sells and how stable its value is:

• Residential property tends to support the highest share of value, judged by the loan-to-value ratio after any existing mortgage.
• Commercial and industrial property also lends well, though lenders are more conservative on specialised buildings and regional locations.
• Vehicles and mainstream equipment with a deep resale market, such as utes, trucks and excavators, are widely accepted.
• Receivables from creditworthy customers can be advanced against through invoice finance.
• Stock is accepted by fewer lenders and at lower percentages, because it can spoil, date or be hard to sell in bulk.

There’s an interesting shift underway. In its October 2025 Bulletin, the RBA observed that owners have for years listed collateral demands, typically a house, as one of their biggest hurdles, while lenders were now reporting a greater appetite for unsecured and lightly secured loans. Asset-backed lending isn’t the only route anymore; it’s often the route to a larger amount, a longer term or a yes after a decline.

Have property or equipment but a bank that’s said no? Let’s look at what it could raise.

Worked example: a Geelong manufacturer

A family-owned fabrication business needs $400k to buy steel for a large contract. Profit dipped last year after a lost customer, so the bank won’t stretch its existing facility. The business has:

• An unencumbered CNC machine and press brake, with a combined resale value around $260k
• $180k of receivables from established customers
• Equity in the directors’ home of about $500k after their mortgage

A cash-flow lender sees a down year. An asset-backed approach sees $940k of identifiable value. Options might include a sale and leaseback of the machinery, an invoice finance line on the receivables, or a short-term second mortgage secured on the family home until the contract pays. Each has a different total cost and risk, and the directors should weigh what they’d be putting on the line, especially their home. Our LVR calculator shows how much property equity is likely to be usable.

Before you pledge anything

• Know what’s already registered against your assets on the PPSR and land titles.
• Get a realistic idea of value; lenders use forced-sale thinking, not optimism.
• Plan the exit: refinance, asset sale, contract payment or ordinary repayments.
• Compare the total dollars repaid, including establishment, valuation and legal fees.

Property owners wanting a short-term, property-secured facility can also look at our own lenders HomeSec Business Finance and EquityTap.

When your balance sheet is stronger than your profit

Plenty of good businesses have a rough year on paper while sitting on real, saleable assets. If that sounds like yours, start with our brief enquiry form, which needs only about a minute. Nothing about it touches your credit report, and we never pass your file around a queue of lenders hoping one bites. Instead, someone on our team reviews your assets and goals and calls you directly. Describe your security accurately, including anything already owed against it, so our first suggestion is a workable one.

Explore borrowing against your assets →