Which loans responsible lending rules cover for a business owner: home, investment and car loans, mixed purpose, licence checks and broker duties.
Business Owners Hub
Responsible Lender · National Credit Code · Predominant Purpose
Responsible lending rules protect plenty of loans a business owner takes out, but not the business loan itself, and the line sits in a place most borrowers do not expect. This is the product map: which of your loans the rules cover, how a mixed purpose loan is judged, and how to check who you are dealing with.
Quick Answer
Responsible lending rules bind licensed lenders and brokers on loans for personal, household or residential investment purposes, which covers a business owner's home loan, investment property loan and personal car loan but not a loan used predominantly for the business. The predominant purpose decides, so the same borrower can hold covered and uncovered loans at once. The obligations themselves are defined in our responsible lending glossary entry, and what protects a business loan instead is set out in the last section of this post.
Also called: responsible lending obligations, RLOs, NCCP lender obligations. A responsible lender is the lender bound by the obligations; responsible lending is the obligations themselves.
What is a responsible lender in Australia?
A responsible lender is a credit provider that holds an Australian credit licence and is bound by the responsible lending obligations in Chapter 3 of the National Consumer Credit Protection Act 2009. Those obligations come down to three steps: inquire into your requirements, objectives and financial situation, take reasonable steps to verify that situation, and assess whether the loan is not unsuitable for you. ASIC's responsible lending guidance sets out the regulator's view, and a lender must give you a written copy of its assessment if you ask for one.
Brokers carry the same obligations at an earlier point. A broker giving credit assistance completes a preliminary assessment before recommending a loan, and the lender completes the final assessment before it signs. How that credit assessment reads a self-employed borrower's income is a separate question from which loans it applies to.
The myth this post takes apart is the idea that a licensed lender applies these rules to every loan it writes. It does not. The obligations attach to the borrower and the purpose of the money, not to the lender's licence alone, which is why one business owner can sit on both sides of the line in the same month.
Which loans are covered by responsible lending rules?
Responsible lending covers a loan when the National Credit Code applies to it, and the Code turns on who borrows and what the money is for. As ASIC's National Credit Code page states at the time of writing, the Code applies where the lender provides credit as a business, a charge is made for the credit, the borrower is an individual or a strata corporation, and the credit is wholly or predominantly for personal use (personal, domestic or household purposes), or to buy, renovate or improve residential property for investment, or to refinance credit used for those purposes.
That last limb surprises people: residential investment is covered, even though most borrowers think of an investment property as a business decision. A loan to a company, or a loan used predominantly for the business, falls outside. ASIC also lists exclusions, including some short-term credit, insurance premium instalment arrangements, bill facilities and certain employee loans.
| Loan | Usually covered? | Why | Where to read more |
|---|---|---|---|
| Owner occupied home loan in your name | Yes | The borrower is an individual and the purpose is personal or household | Self-employed home loan |
| Residential investment loan in your name | Yes | The Code names residential investment property expressly | Self-employed home loans guide |
| Personal car loan | Yes | The car is wholly or predominantly for personal use | ABN car loan guide |
| ABN car loan used mainly for business | Usually not | Depends on the predominant purpose, not on holding an ABN | Chattel mortgage |
| Business term loan or overdraft | Usually not | The money is for the business | Business loans |
| Commercial property loan to a company | Usually not | The borrower is a company and the property is not residential | Commercial property loan |
| Home-secured loan used mainly for the business | Usually not | The predominant purpose decides, not the security | Business purpose declarations |
Sources: ASIC, National Credit Code, last updated 1 August 2025. Read 20 October 2026.
Covered
- The home you live in, borrowed in your name
- A residential investment property in your name
- A car bought mainly for personal use
- A home-secured loan used mainly for a home renovation
- Refinancing any of the above
Not covered
- A business term loan or overdraft
- A chattel mortgage on a vehicle used mainly for work
- Any loan where a company is the borrower
- A commercial property bought as an investment
- A home-secured loan used mainly for the business
What about a loan that is part business, part personal?
A loan that is part business and part personal is judged as a whole: if the money is wholly or predominantly for personal use, the Code applies to the entire loan, and if it is predominantly for the business, it usually does not. The predominant purpose decides, not the security offered and not whether the borrower holds an ABN.
From the underwriter's seat, a vague purpose is the real problem. An application that says "business and personal" with no split is the one that comes back with questions, because the lender cannot tell which rules it is lending under.
On a business loan, lenders usually ask the borrower to sign a business purpose declaration. How that declaration works, and what happens if the money is later spent personally, is covered in our post on caveat loans used for personal spending, and the second mortgage exit rules post shows the same test on a short-term loan.
Are investment property loans covered by responsible lending?
Investment property loans are covered by responsible lending when an individual borrows to buy, renovate or improve residential property as an investment, because the National Credit Code names that purpose expressly. Residential investment is covered, which means the lender must inquire, verify and assess exactly as it would on the home you live in.
Commercial property is different. An individual buying a shop, office or warehouse as an investment usually falls outside the Code, because the property is not residential and the purpose is not personal or household. A loan to a company, or to a trust with a corporate trustee, falls outside whatever the property type, because the Code covers individuals and strata corporations. Structure varies by deal, so the borrower named on the contract is worth settling with your accountant before you apply.
Our commercial property loans page explains how those loans are assessed instead, and the commercial property loan entry covers the basics.
How do you check a lender or broker holds an Australian credit licence?
You check a lender or broker's Australian credit licence on ASIC's professional registers, which let you search by name or number for credit licensees and for the credit representatives authorised to act for them. Check the credit licence before you sign, because the responsible lending obligations only bind someone who is licensed or acting for a licensee.
- Credit licensee. Holds the licence and answers to ASIC for everything done under it.
- Credit representative. Authorised by a licensee to provide credit assistance on its behalf; the register shows which licensee stands behind them.
- Credit guide. On a regulated loan, the lender and any broker must give you one, setting out who they are, their licence details and how to complain.
Not every business lender holds a credit licence, because a lender that only writes business loans does not need one. The protections that apply to that lender instead are set out in the last section of this post.
Do mortgage brokers have duties beyond responsible lending?
Mortgage brokers have a best interests duty on top of responsible lending: when a broker gives credit assistance on a regulated home loan, the broker must act in your best interests and put your interests first where they conflict with the broker's own. Responsible lending asks whether a loan is not unsuitable; the best interests duty asks whether the recommendation is right for you, which is a higher bar.
In practice, the duty shapes how a broker builds the file: why a loan was recommended, which other options were considered, and how your objectives were tested against them. The broker's preliminary assessment sits alongside it. On a business loan neither obligation applies in the same way, because the loan is unregulated, though industry body membership and a lender's own code of practice may still set standards.
What protects you on a business loan instead?
On a business loan, the protections that replace the National Credit Code come from other places: industry codes of practice, the external dispute resolution scheme, the unfair contract terms laws, and the ASIC Act protections against misleading and unconscionable conduct. A business loan usually sits outside the Code, but it does not sit outside the law. Our business loan protections guide walks through each one, including the limits on small business disputes.
If you are weighing a business loan against a home-secured loan or an ABN car loan, the purpose of the money decides which regime you are in. Where this commonly lands is a conversation about structure before the application goes in, not after. You can check eligibility first, or browse more lending questions in the Business Owners Hub.
Responsible lending is a feature of the loan, not of the lender. The National Credit Code covers credit to individuals that is wholly or predominantly for personal, household or residential investment purposes, so a business owner's home loan, investment property loan and personal car loan are covered, while a loan used predominantly for the business, or any loan to a company, usually is not. The predominant purpose decides, and ASIC's register tells you who is bound.
Key takeaway: settle the loan's purpose and the borrower's name before you apply, and check the credit licence before you sign.Frequently Asked Questions
Responsible lending means a licensed lender or broker must make reasonable inquiries about your situation, verify it, and assess that a loan is not unsuitable before offering or recommending it. The obligations sit in Chapter 3 of the National Consumer Credit Protection Act 2009 and apply to regulated consumer credit, not to most business loans. Our responsible lending glossary entry covers the definition in more detail.
You can check whether a broker is licensed by searching ASIC's professional registers by name or number, which list credit licensees and the credit representatives authorised to act for them. On a regulated loan the broker must also give you a credit guide with its licence details. A lender that only writes business loans may not hold a credit licence at all.
The NCCP applies to lenders, brokers and anyone else engaging in credit activities on regulated credit, and each must hold an Australian credit licence or act for a licensee. The credit itself is regulated when it goes to an individual or strata corporation wholly or predominantly for personal, domestic, household or residential investment purposes. Loans for business purposes usually fall outside it, as our business loan protections guide explains.
An ABN car loan is covered by responsible lending only when the car is wholly or predominantly for personal use; holding an ABN does not change that on its own. A car used mainly for the business, financed under a chattel mortgage or business car loan, usually sits outside the Code. Our ABN car loan guide explains how lenders treat the purpose.
Responsible lending usually does not apply to a company loan, because the National Credit Code only covers credit to individuals and strata corporations, and an SMSF loan with a corporate trustee sits outside it for the same reason. Where an SMSF borrows through individual trustees, treatment can vary, and many lenders ask for a corporate trustee in any case. Whether a particular contract is regulated is a question for your solicitor.
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