Quick answer
Net worth is the value of everything owned minus everything owed. For a business it's the same as net assets or owner's equity on the balance sheet. For a director or sole trader it's the personal figure: home, super, savings and vehicles, less mortgages, loans and card balances. Lenders look at both to judge how much buffer stands behind the loan.
Key points
- Net worth = total assets minus total liabilities, for a business or a person
- On a company balance sheet it appears as equity, net assets or shareholders' funds
- Lenders often ask guarantors for a signed statement of personal assets and liabilities
- High net worth tied up in property doesn't pay repayments: cash flow still matters
Net worth answers a simple question: if you sold everything and paid off every debt, what would be left? Add up assets, subtract liabilities, and the result is net worth. It can be measured for a business, for an owner personally, or for a family group that holds property across several names.
Two kinds of net worth a lender looks at
Business net worth comes straight off the balance sheet. business.gov.au treats net assets, owner’s equity and shareholders’ equity as other names for the same thing. It grows when the business keeps profits instead of paying them out, and shrinks with losses or large drawings.
Personal net worth belongs to the owner. When you sign a personal guarantee, the lender wants to know what sits behind your signature. Many will ask for a statement of position, sometimes called an assets and liabilities statement, listing:
| Assets | Liabilities |
|---|---|
| Home and any investment properties | Home loans and investment loans |
| Cash and term deposits | Car and equipment loans |
| Shares and managed funds | Credit card and overdraft limits |
| Superannuation | Personal tax debts |
| Vehicles and other valuables | Guarantees already given for others |
That last row surprises people. An existing guarantee is a contingent liability: you may never have to pay it, but a lender will count it anyway.
Why a big number doesn’t guarantee a yes
Net worth tells a lender how much buffer exists if things go wrong. It doesn’t tell them how the loan gets repaid month to month. Someone with $3m in property but a business that barely breaks even can be declined for a modest unsecured loan, while a newer owner with little wealth but strong, steady deposits gets approved.
Lenders separate three ideas that often get blurred:
- Net worth: are assets bigger than debts overall?
- Liquidity: is there cash or near-cash to pay bills now?
- Solvency: can the business pay its debts when they fall due?
Wealth locked in a home or a farm only becomes useful to a lender when it’s offered as security. The RBA’s October 2025 bulletin found that around half of smaller SME loans are secured by residential property, which is how many owners convert personal net worth into business borrowing.
If your wealth is mostly in bricks and mortar, ask us how that could back a business loan.
A worked example
Priya owns a physiotherapy clinic in Adelaide through a company. Her statement of position reads:
- home valued at $1.1m, with a $520k mortgage
- super of $210k
- savings of $35k and a car worth $28k
- a $15k credit card limit and a $22k car loan
Total assets: $1.373m. Total liabilities: $557k. Personal net worth: about $816k.
Her clinic’s balance sheet shows net assets of $140k. A lender reviewing a $250k fit-out loan sees solid personal backing, but it will note that most of her wealth is the $580k equity in her home and her super, neither of which is spendable cash. If she offers the home as security, her available equity matters far more than her total net worth. The property equity calculator gives a rough read on that figure.
Related terms
Wealth on paper, short on cash?
Being asset-rich and cash-poor is a common reason owners come to us, especially after a bank says the business figures alone don’t stack up. Property you already own can often support a secured business loan that an unsecured lender wouldn’t consider.
Our enquiry asks for about a minute of your time and no credit check comes with it. Your details stay with us rather than being circulated to a long list of funders, and a person who understands secured lending will phone you. Please list your assets and debts as accurately as you can, since that’s what lets us match the right lender the first time.
Frequently asked questions
How do I calculate my net worth?
List everything you own at a realistic current value, such as property, savings, shares, super and vehicles. Then list everything you owe, including mortgages, car loans, credit card limits in use and tax debts. Subtract the second total from the first.
Is net worth the same as equity?
For a business, broadly yes. Equity, net assets and net worth all describe assets minus liabilities. In property lending, 'equity' is also used more narrowly to mean the value of one property minus the debt secured on it.
Can a business have negative net worth?
Yes. When liabilities exceed assets, the balance sheet shows a deficiency. That's a warning sign to lenders, though it isn't the same as insolvency, which is about being unable to pay debts as they fall due.
Why does a lender want my personal net worth for a business loan?
If you guarantee the loan, your personal position is part of the security. A statement of your assets and liabilities shows the lender what would stand behind the guarantee and whether there's equity in property that could be offered.
Should I include super in my net worth?
It's part of your personal wealth, so many statements of position list it. Lenders usually discount it heavily for a business loan because you generally can't access it until retirement.