commercial equity release

Key takeaways

• Commercial equity release uses equity in real estate to support a business-purpose loan, with the property held as security.
• Equity Tap's equity release business loans run from $50,000 to $5 million over one to twelve months.
• Short-term facilities need a clear exit, such as a sale, a refinance or incoming business funds.
• Prepaid interest is not waived. It affects both the total cost and the cash you receive.
• The useful comparison is the net cash received, the total repayable and what happens if the exit is delayed.

How does commercial equity release work, step by step?

The process moves from a first enquiry through assessment and approval to settlement, and it ends with repayment through a planned exit.

1. Enquire. You outline the business purpose, the property available as security and how the loan would be repaid. Equity Tap doesn't run a credit check at the enquiry stage.
2. Initial assessment. The lender looks at the whole scenario, including the security, the amount, the term and the exit. A credit check is not part of this initial stage either.
3. Assessment and approval. Every application is subject to lending criteria, assessment and approval, so any outcome depends on the lender's decision.
4. Documents and final checks. Loan documents are signed and the final checks are completed before settlement.
5. Settlement. Funds are released once approval, documents and final checks are in place.
6. Exit. The facility is repaid within the term through a sale, a refinance or incoming business funds.

What is commercial equity release?

Commercial equity release is borrowing for a business purpose against the equity held in real estate, with the property standing behind the loan as security. Equity is broadly the gap between a property's value and what is still owed on it. The equity is what makes the property useful as security for further borrowing.

Equity Tap is a direct private lender that has lent its own money since 2022. It is a small team that makes its own lending decisions and works with borrowers across Australia. You can read more about Equity Tap and how the team operates.

Every Equity Tap facility is for a business purpose and is secured by property. That separates it from personal borrowing, such as a loan for a holiday or a car. For independent, general information on how business borrowing works and the questions worth asking before taking on debt, Moneysmart is a useful starting point.

How are Equity Tap's property-secured facilities structured?

Equity Tap's facilities are short term and sized to the scenario. Loan amounts sit between $50,000 and $5 million and terms run from one to twelve months.

Security. Residential or commercial real estate can be considered. A business owner's home or an investment property may therefore form part of the security, as well as a commercial building. To get a rough sense of available equity before enquiring, the property equity calculator can help frame the numbers.

Borrowers. Equity Tap can consider micro businesses, sole traders and larger Australian companies.

Pricing. Equity Tap does not publish an interest rate or rate range. Pricing depends on the particular scenario and the lender's assessment of it. This is one reason the overall cost comparison later on this page matters.

General background on the types of business finance available in Australia is on business.gov.au.

Why does a short-term facility need an exit strategy?

A facility of one to twelve months has to be repaid within that window, so the lender and the borrower both need a realistic plan for where the repayment money will come from. That plan is the exit.

Equity Tap considers three broad exits:

Timing matters as much as the exit itself. Sales can take longer than planned, refinance approvals can stall and expected payments can arrive late. Before committing, it helps to understand what would happen if the exit slips past the planned date, including any extra cost and how the remaining term would be handled. Moneysmart's general guidance on borrowing covers why repayment planning is central to any loan.

How does prepaid interest work, and is the interest waived?

The interest is not waived. For eligible facilities, up to six months of interest may be prepaid into the loan, so there are no scheduled payments during that period. The interest still forms part of the total cost and reduces the net proceeds.

Prepaid interest can free up cash flow during a busy period because no regular payments fall due for that time. The trade-off is that the interest is calculated and set aside at the start rather than paid as you go.

In practice, the amount borrowed is not the same as the cash that reaches your account. Fees and any prepaid interest come out of the facility first, and the money left over is the net amount received at settlement. A larger prepaid period usually means a smaller net amount from the same loan, even though the total repayable stays tied to the full facility. Looking at both figures side by side gives a clearer picture of the cost.

Does credit history matter, and how long does settlement take?

Credit history is considered, but not on its own. Equity Tap doesn't run a credit check when you enquire or at initial assessment. Past defaults, arrears or a low credit score are weighed in the context of the whole scenario. If your credit history is a concern, the page on business loans with bad credit considered explains more.

Considering a scenario is not the same as approving it. All applications remain subject to lending criteria, assessment and approval, and eligibility depends on the lender's assessment.

On timing, eligible and straightforward loans may settle in as little as 24 hours after approval, signed documents and final checks. That figure describes an eligible scenario. It is not a promise of approval or a fixed settlement time, and more complex security or exit arrangements can take longer.

Who can commercial equity release suit, and when is it not the answer?

Commercial equity release can fit a business with real estate equity, a defined business purpose and a credible short-term exit. Examples include bridging a gap until a property sells, funding a time-sensitive opportunity, or covering a period before expected business funds arrive. Where timing is the main issue, business bridging loans cover that situation in more detail.

It may not be the answer in some situations:

• The need is long term, beyond a one to twelve month horizon.
• The funds are for a personal rather than a business purpose.
• There is no realistic exit within the term.
• A cheaper or simpler option is available. For example, if the issue is a tax debt, an ATO payment arrangement on its own may be enough.

Government guidance on business finance options can help frame the alternatives. Tax questions about business borrowing, such as how interest is treated, can be checked with the ATO or a registered tax agent.

What should you compare before proceeding?

Before proceeding, compare the net cash received, the total repayable and the plan if the exit is delayed. Looking at the headline loan amount alone does not show the full cost.

Moneysmart and business.gov.au both offer independent, general guidance on business borrowing. The ATO can help with questions about the tax side of borrowing for a business.

If commercial equity release sounds like it fits your situation, the next step is to start your application. It helps to have a short description of the business purpose, the property you could offer as security and how you plan to repay. Starting takes only a few minutes. No obligation. Eligibility is subject to assessment.

This is general information only and does not take into account your objectives, financial situation or needs. All applications are subject to lending criteria, assessment and approval. Fees and charges may apply.

Frequently asked questions

General information only, not legal, tax or financial advice.