Borrowing Through a Trust or Company Structure: How Lenders Assess It
A trust cannot borrow in its own name, and a loan to a company sits outside the consumer credit rules entirely. Both facts change your application in ways that are hard to fix once you are under contract.
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The short answer
A trust cannot borrow in its own right, so the trustee borrows on its behalf and lenders assess the trustee and the individuals behind the structure rather than the trust alone. The trust deed must permit the trustee to borrow and to grant security over trust assets, and where it does not, a supplemental deed or a solicitor’s confirmation is generally needed first. Expect personal guarantees from the directors of a corporate trustee, a narrower lender panel, more documentation and a longer assessment. There is also a consequence rarely explained: the National Credit Code applies only where the borrower is a natural person or a strata corporation, so a loan to a company is not regulated by it at all, which means the responsible lending obligations and the Best Interests Duty do not apply.
The short answer
People generally choose a trust or company structure for reasons that have nothing to do with lending: asset protection, tax planning, succession, or because an accountant recommended it years ago. Then they go to borrow and discover the structure has changed the transaction in ways nobody mentioned.
None of those changes are reasons to avoid structured ownership. They are reasons to understand what you are trading before you commit to a property, because several of them are difficult to fix once you are under contract.
Who is actually borrowing
This is the foundation, and getting it clear resolves most of the confusion that follows.
A trust is not a separate legal entity. It cannot hold a loan in its own name. The trustee borrows on behalf of the trust and appears on the loan documents and title, usually in a form such as the trustee’s name acting as trustee for the named trust. The trust holds the beneficial interest, so income and capital gains flow to beneficiaries according to the deed, but the legal borrower is the trustee.
A company is a separate legal entity. It can borrow in its own name. But because it has limited liability, lenders almost always want recourse to the people behind it, which is where directors’ guarantees come in.
A corporate trustee combines both. The company borrows in its capacity as trustee, and the lender assesses the trust, the trustee company, and the directors. That is three sets of information rather than one, which is a large part of why these applications take longer.
Many lenders prefer a corporate trustee over individual trustees, because it offers clearer continuity and simpler succession if a trustee dies or steps down. That preference is worth knowing before the structure is set up, though the decision itself belongs with your accountant and solicitor.
The protections you give up
This section deserves the most attention because it is the least discussed, and it is a genuine consequence rather than a technicality.
The National Consumer Credit Protection Act 2009 and its National Credit Code only apply where two tests are met. The first is the entity test: the borrower must be a natural person or a strata corporation. The second is the purpose test: the credit must be wholly or predominantly for personal, domestic or household purposes, or to purchase, renovate or improve residential property for investment purposes, or to refinance such credit.
Apply that to structures and the results are stark:
- A loan to a company is not regulated by the Code. The entity test fails, and it fails regardless of what the money is used for. Even a loan to a company to buy a residential investment property, which would plainly be regulated if you borrowed in your own name, falls outside the Code when the company is the borrower. That remains the case even where an individual gives a mortgage or a guarantee, because the test looks at the identity of the borrower.
- A loan to a trust depends on the trustee. Where the trustee is an individual, the entity test can be satisfied and the loan may be regulated if the purpose test is met as well. Where the trustee is a company, it generally is not.
- Investment other than residential property sits outside the Code anyway. Borrowing to buy shares, or for a business, fails the purpose test whoever the borrower is.
What follows from being outside the Code matters. The responsible lending obligations do not apply. The statutory Best Interests Duty on brokers, set out in ASIC Regulatory Guide 273, applies to credit assistance provided to consumers and does not extend to unregulated lending. The Code’s hardship provisions and its protections around guarantees do not apply either.
Two important qualifications, because this is not a loophole to be exploited in either direction.
First, where a party claims in proceedings that the Code applies, it is presumed to apply unless the contrary is established, and the onus sits with the credit provider. Second, courts have looked through structures used to defeat the Code. In cases where a company was inserted into a transaction with no apparent purpose other than avoiding the Code, and the individuals behind it were in substance the real debtors rather than merely guarantors, courts have held the Code applied regardless. Structuring for genuine commercial reasons is ordinary practice. Structuring purely to strip a borrower of statutory protections is not, and it does not reliably work.
The practical takeaway is not to avoid structures. It is that when you borrow through one, the standard of conduct you receive depends more on who you deal with, because less of it is imposed by statute. That is worth factoring into your choice of lender and adviser.
The trust deed decides a lot
The deed is the rulebook, and a lender will read it before it reads anything else. Two powers matter above all others:
- That the trustee may borrow.
- That the trustee may grant security over trust assets.
Some deeds cover both plainly. Some are silent. Some restrict borrowing, or require consents from beneficiaries before the trustee can act. Older deeds in particular can contain provisions that no longer suit how the trust is actually being used.
Where the deed does not clearly permit the transaction, your solicitor may need to prepare a supplemental deed or provide confirmation of the trustee’s position at law. That is entirely fixable, but it takes time and it costs money, and it is the single most common cause of delay on trust applications.
The obvious conclusion, and the one most often ignored: have the deed reviewed before you are under contract. A settlement date is a poor time to discover that your trustee lacks the power to mortgage the asset it is buying. You will also need a trustee resolution recording approval of the borrowing, along with any variations to the deed, properly executed and stamped where applicable.
Who has to guarantee
Expect personal guarantees. Because a trust is not a separate legal entity and a company has limited liability, a lender wants recourse to individuals. The general pattern across the market:
| Structure | Who typically guarantees |
|---|---|
| Individual trustee | The individual is the borrower in their capacity as trustee, and generally guarantees personally as well. |
| Corporate trustee | The company borrows; all directors are generally required to give personal guarantees. |
| Adult beneficiaries | Practice varies materially. Some lenders require guarantees from beneficiaries receiving distributions; others only where the beneficiary is also a director. |
| Unit trust unitholders | Assessed case by case, depending on the structure and the strength of the application. |
| Company, not as trustee | Directors, and often shareholders with meaningful control. |
General market practice at the time of writing. Individual lender policy varies and changes; this is not a statement of any lender’s requirements.
The point worth pausing on is what a guarantee actually means. Personal assets stand behind the debt. If the structure was chosen partly for asset protection, understand that a guarantee cuts across that in respect of this borrowing, which is precisely the outcome the lender is seeking. Whether that is acceptable is a decision to make with advice, and the guarantee documents should be reviewed by your solicitor rather than signed at settlement.
Where the Code does not apply, its specific protections around guarantees do not apply either, which is a further reason for independent legal review rather than reliance on statutory safeguards.
How distribution income is read
Lenders generally want to see a pattern rather than a single good year. In practice that usually means around two years of distributions, supported by the trust’s financial statements and tax returns, and frequently confirmed by a letter from your accountant.
Where this goes wrong is instructive. Distributions in a discretionary trust are often varied between beneficiaries year to year for legitimate tax reasons. To you that is planning. To a credit assessor reading it cold, it can look like volatile and unreliable income. The fix is not to change what you do but to explain it: a clear accountant’s letter setting out the pattern and the reasoning does a great deal of work here.
Other things that draw attention include missing or late trustee resolutions, distributions recorded but never actually paid, and financial statements that do not reconcile with the tax returns. Trusts and trustee companies can also carry their own credit files, so applications made elsewhere and any blemishes are visible.
If your income is largely business income flowing through a structure, our guide on self-employed borrowing with limited accounts covers the evidence side in more detail.
A narrower lender panel
This is the cost of structured ownership that surprises people most, and it is worth being blunt about.
Not every lender will lend to a trust. Some decline trust applications outright. Others will only assess them through a commercial division rather than a residential one, which can mean different pricing, different terms and a different assessment approach than the same borrower would receive personally. Corporate trustee structures attract additional scrutiny because the lender has to satisfy itself on both the trust and the trustee company.
The practical consequence is that your effective panel is smaller, and which lenders are genuinely comfortable with your specific structure is not something you can determine from a website. It is also not static. A lender comfortable with unit trusts last year may not be this year.
This is the main reason to have your structure assessed against the market before an application goes anywhere. A decline on a structured application costs you the same credit enquiry as any other, and with a smaller panel you have less room to absorb them.
What you will need to produce
Assembling this before you apply makes a material difference to how the assessment runs.
- A certified copy of the trust deed, including all variations, stamped where applicable
- A trustee resolution approving the borrowing and the granting of security
- For a corporate trustee, the company constitution and a current company extract
- Trust financial statements, generally two years, profit and loss and balance sheet
- Trust tax returns and notices of assessment
- Evidence of distributions, and an accountant’s letter where the pattern needs explaining
- Identification and personal financials for every trustee, director and guarantor
- Details of all existing debt across the group, including facilities in related entities
That last item is worth emphasising. Lenders assess the group, not the entity in isolation. Debt sitting in a related company or another trust is part of the picture, and omitting it does not help you.
The announced trust tax change
Anyone weighing a trust structure in 2026 should know about this, because it goes to why people use discretionary trusts in the first place.
On 12 May 2026, as part of the 2026-27 Federal Budget, the Government announced a 30 per cent minimum tax on discretionary trusts, to apply from 1 July 2028. The tax would apply at the trustee level, and non-corporate beneficiaries presently entitled to a share of the trust’s net income would be able to claim a non-refundable credit for tax paid by the trustee. A time limited restructure rollover of three years was announced alongside it. The ATO’s own guidance confirms the measure and states plainly that it is not yet law.
You can read the ATO’s summary on its page covering the proposed minimum tax on discretionary trusts.
Three things to hold in mind. Budget materials indicated a range of exclusions, including primary production income, fixed and widely held trusts, superannuation funds, special disability trusts, deceased estates, certain testamentary trusts existing at 12 May 2026, and charitable trusts. Commentary from professional bodies noted that no grandfathering was proposed for existing discretionary trusts. And significant design questions remained unresolved pending exposure draft legislation.
None of this changes how a lender assesses your application today. What it may change is the calculus behind choosing a discretionary trust for a long-term investment holding, particularly where distributing income to lower-rate beneficiaries was central to the plan. That is squarely a question for your accountant, and because the measure is announced rather than legislated and its detail is unsettled, acting prematurely carries its own risk. We raise it because a page about borrowing through trusts that ignored it would be leaving out something material.
Separately, if you are considering property inside a self managed super fund, note that from 10 August 2026 a new limited recourse borrowing arrangement to acquire real property can only be used where the property is business real property. This is commonly described as a ban on residential borrowing, which captures the practical effect, but the operative test is business real property rather than the residential or commercial label, and the property must meet that test for the life of the arrangement. Our SMSF loans page covers that structure, and whether an SMSF is appropriate for you is a question for a licensed financial adviser.
Read Intellect Finance’s real Google reviews
Knowing which lenders are genuinely comfortable with a particular structure, before an application is submitted, is most of the value on a file like this. Here are Intellect Finance’s actual Google reviews, pulled live from our Google Business Profile, so you can see how clients describe the experience. They are real and unedited.
These reviews reflect other borrowers’ experiences. They are not a promise of any particular outcome for your finance, which will always depend on your own circumstances and lender assessment.
How Intellect Finance can help
Structured lending is Charbel’s territory. He works across trust, corporate trustee, unit trust and SMSF files daily, and the first thing he will do is read your deed and tell you whether it supports the transaction. We assess across a panel of more than 100 lenders and can tell you which are currently comfortable with your specific structure, which matters because that list changes and it is not published anywhere. Where the deed needs a supplemental instrument or a solicitor’s confirmation, we flag it early rather than at settlement. Where your accountant should weigh in on the structure before you borrow, we will say so. Intellect Finance Pty Ltd holds Australian Credit Licence 390611, is a member of the MFAA and AFCA, and has operated from Penrith since 2005. We do not charge you a fee for arranging your loan. For more see our investment loans, commercial loans, corporate loans and SMSF loans pages.
Frequently Asked
Trust and company borrowing FAQs
The questions borrowers ask most about structured ownership and finance.
Can a trust borrow money?
Not in its own right. A trust is not a separate legal entity, so the trustee borrows on behalf of the trust and is recorded as the borrower, typically in the form of the trustee’s name acting as trustee for the named trust. The trust holds the beneficial interest in the property. This is why lenders assess the trustee and the individuals behind the structure rather than the trust in isolation, and why the trust deed matters so much: it determines whether the trustee has the power to borrow at all.
Does the Best Interests Duty apply if I borrow through a company?
Generally no. The National Credit Code applies only where the borrower is a natural person or a strata corporation, so a loan to a company is not regulated by it regardless of what the money is used for. That means the responsible lending obligations and the Best Interests Duty that apply to consumer credit assistance do not attach to it. A trust is different again and depends on the trustee: where the trustee is an individual the entity test can be met, and where the trustee is a company it generally is not. This is one of the most significant and least discussed consequences of choosing a structure.
Will I have to give personal guarantees?
In nearly all cases, yes. Because a trust is not a separate legal entity and a company has limited liability, lenders want recourse to individuals. Where there is a corporate trustee, all directors are generally required to guarantee. Where an individual is trustee, that person is the borrower and guarantees personally. Practice on adult beneficiaries varies significantly between lenders: some require guarantees from beneficiaries who receive distributions, others require them only from beneficiaries who are also directors. For a unit trust, unitholder guarantees are usually assessed case by case.
What will the lender want to see in the trust deed?
Two powers above all: that the trustee may borrow, and that the trustee may grant security over trust assets. Some deeds are silent on these, some restrict them, and some require consents from beneficiaries first. Where the deed does not clearly permit the transaction, your solicitor may need to prepare a supplemental deed or confirm the trustee’s position at law, which takes time and costs money. This is the single most common cause of delay on trust applications, and it is worth having the deed reviewed before you are under contract rather than after.
How do lenders treat trust distribution income?
They generally want to see a consistent pattern rather than a single year, commonly two years of distributions supported by the trust’s financial statements and tax returns, and often confirmed by a letter from your accountant. Inconsistent distributions, missing trustee resolutions or poor record keeping are treated as a risk signal. Where distributions have moved around between beneficiaries for tax reasons, be prepared to explain the pattern, because a lender reading it cold may see volatility where you see planning.
Do all lenders lend to trusts and companies?
No, and this is where structure costs you options. Some lenders decline trust applications outright, and others will only assess them through a commercial division, which can mean different pricing and terms than a residential application would attract. Corporate trustee structures attract additional scrutiny because the lender must assess both the trust and the trustee company. The practical effect is a smaller panel, so knowing which lenders are genuinely comfortable with your structure before you apply matters more than it would on a personal application.
Does borrowing through a structure take longer?
Usually, yes. There is more to review: the deed and any variations, a trustee resolution approving the borrowing, company documents where there is a corporate trustee, trust financial statements and tax returns, and identification and financials for every trustee, director and guarantor. Assembling a complete pack before applying makes a material difference. Where a purchase has a contract date, build the extra time into your planning rather than assuming a structured application will move at the same pace as a personal one.
Should I buy in a trust or in my own name?
That is a tax, legal and asset protection question rather than a credit question, and it belongs with your accountant and solicitor before you speak to a lender. What we can tell you is what each structure costs you in lending terms: a narrower lender panel, personal guarantees, more documentation, longer assessment, and in the case of company borrowing, the loss of the consumer credit protections that would otherwise apply. Those trade-offs are real and should be weighed against whatever benefit the structure is intended to deliver.
The bottom line
Borrowing through a trust or company is entirely normal and often sensible, but it is not the same transaction as borrowing in your own name. The trustee is the borrower, the deed determines whether the transaction is possible at all, personal guarantees are close to universal, the lender panel is smaller, and the assessment takes longer. Where the borrower is a company, the loan sits outside the National Credit Code regardless of purpose, which removes the responsible lending obligations and the Best Interests Duty that would otherwise apply.
Three things will save you the most trouble. Have the deed reviewed before you are under contract, not after. Understand exactly what you are guaranteeing and have a solicitor read those documents. And get your structure matched to lenders that are actually comfortable with it before an application is lodged, because a decline costs you an enquiry you can less afford with a narrow panel. Whether the structure itself is right for you is a question for your accountant and solicitor, and it is worth settling before the finance conversation rather than during it.
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Important disclosures, general advice warning and licensing
General information only. This article is general information only and does not constitute financial, credit, legal, or tax advice. It does not take your personal or financial circumstances into account. Before acting on any information here, you should consider whether it is appropriate to your objectives, financial situation, and needs.
General guidance, not advice on your structure. This article describes how lenders generally approach trust and company borrowing at the time of writing. It is not a quote, an offer of finance, or a statement of any particular lender’s policy, and lender appetite for specific structures varies and changes. Whether a trust or company structure is appropriate for you is a legal, tax and asset protection question, not a credit question.
Which rules apply depends on the borrower and the purpose. The National Credit Code applies only where the borrower is a natural person or a strata corporation and the purpose test is met. Credit provided to a company is generally not regulated by the Code whatever its purpose, and credit to a trust depends on whether the trustee is an individual or a company. Where the Code does not apply, the responsible lending obligations and the Best Interests Duty applicable to consumer credit assistance do not apply either. Whether a particular loan is regulated depends on its own facts and is ultimately a legal question. Approval is never guaranteed.
Legal and tax matters sit outside our lane. Trust deeds, supplemental deeds, trustee resolutions, guarantees and security documents are legal instruments and should be reviewed by your solicitor before signing. The choice of structure, distribution planning, and the effect of announced or enacted tax measures are questions for your accountant or registered tax agent. Announced tax measures may not yet be law and their detail can change before enactment; confirm the current position before acting. Whether an SMSF arrangement suits you is a question for a licensed financial adviser. Nothing here is legal, tax or financial advice. Intellect Finance provides credit assistance only.
About the reviews shown. The reviews displayed on this page are genuine reviews published by clients on Intellect Finance’s Google Business Profile, shown live via a third-party reviews widget. They reflect those individuals’ own experiences and are not a promise of any particular outcome for your loan.
Fees. Intellect Finance does not charge you a fee for arranging your loan. We are paid by the lender on settlement, not by you. In the rare situations where a fee could apply, it is set out in our Credit Guide and disclosed to you in writing before any work begins, so you are never charged anything you were not told about upfront.
Intellect Finance Pty Ltd holds Australian Credit Licence 390611 and is a member of the MFAA and AFCA. Lending criteria, fees, and terms apply.
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