Holding Bitcoin doesn’t mean you need to sell it when you need liquidity. Bitcoin-backed loans provide a straightforward way to unlock cash flow while keeping your crypto invested. At Vield, we regularly assist small businesses and self-employed professionals in doing just that—without forcing them to part ways with their long-term holdings.
Below, we focus on one of the most common and practical uses for crypto-backed lending: short-term cash flow.
The Problem: Tied-Up Capital, Pressing Expenses
Many crypto holders face a similar challenge: they believe in the long-term growth of Bitcoin, but a temporary need for fiat cash arises. It might be to cover a business cost, invest in a new opportunity, or meet an unexpected expense. Selling their Bitcoin isn't appealing—it may trigger capital gains tax, lose the future upside, or take time depending on liquidity.
This is where Bitcoin-backed loans come in. Rather than selling their asset, borrowers use it as collateral to access a cash loan, usually denominated in AUD, USDT, or another stable asset.
How Bitcoin-Backed Loans Work
Let’s simplify the mechanics:
- You deposit Bitcoin with a lender like Vield.
- The lender assesses the value based on current BTC market price and offers a loan with a conservative Loan-to-Value (LVR) ratio—typically 30-50%.
- You receive fiat funds, which can be used however you for your loan’s original purpose.
- You repay the loan with interest. Once repaid, your Bitcoin is returned.
There is no credit check. The loan is secured by the crypto itself. If the value of BTC drops significantly, you may be required to top up your collateral or risk liquidation.
Example: A Self-Employed Consultant in Sydney
A self-employed consultant recently approached Vield with a short-term issue. A delayed payment from a major client left him unable to pay staff on time for a high-pressure month. Rather than sell his holdings, he opted to take out a Bitcoin-backed loan.
- Collateral: 2.8 BTC
- BTC Price at Time of Loan: $130,000 AUD per BTC
- Loan Amount: $91,000 AUD (LTV ~25%)
- Use of Funds: Staff wages, bridging invoice payments
- Outcome: Loan repaid within 8 weeks after the client paid their outstanding invoice. No liquidation required. Bitcoin returned.
For privacy reasons, we cannot disclose client names or identifying details. What we can share is that the borrower was able to meet urgent cash flow needs without compromising long-term strategy or realising capital gains.*
Why Not Just Use a Bank?
Traditional banks don’t recognise Bitcoin as an asset they can lend against. Even with significant BTC holdings, you may not qualify for a bank loan. In contrast, a crypto-backed loan operates more like a secured line of credit—it’s fast, asset-backed, and based purely on the value of the collateral.
Key Considerations Before Taking a BTC Loan
- Volatility Risk
If Bitcoin drops significantly in value, your loan may go into default before your collateral is liquidated. In the event of a default, borrowers are typically given 30 days to remedy the loan — either by adding more collateral or repaying part of the loan — before any liquidation process begins. At Vield, we are proud to have maintained a record of zero defaulted loans, reflecting the strength of our client support and proactive risk management. - Interest Rates
While typically competitive with unsecured loans, interest rates can vary depending on provider, LTV, and loan duration. - Custody Security
Always verify how your collateral is stored. At Vield, we use audited MPC custody solutions with Utila, ensuring your assets are protected.
How Vield Can Help
Using Bitcoin to secure short-term cash flow is not just viable—it’s increasingly practical for crypto holders who believe in the long-term trajectory of the asset. Whether you’re running a small business, freelancing, or investing in new ventures, holding onto your BTC while accessing liquidity can be the smarter move.
Vield continues to help clients across Australia access fiat without selling their Bitcoin. If you're facing a temporary cash flow pinch and hold BTC, consider whether a loan against your crypto could solve the problem—without compromising your future.
For more information, book a meeting with our team or contact us today.
* Borrowing against your Bitcoin does not typically trigger a capital gains tax (CGT) event, as there is no disposal of the asset. However, tax treatment may vary depending on your jurisdiction and individual circumstances. We recommend consulting a qualified tax adviser.
More Use Cases:
