Secured business loans priced on the strength of your security.

A secured business loan is a term loan backed by an asset the lender can claim if the loan is not repaid, most commonly residential or commercial property, and sometimes equipment, vehicles or a general security agreement over the business. Because the lender’s risk is lower, secured loans offer larger amounts, longer terms and lower rates than unsecured lending. They suit established purposes such as expansion, refinancing, buying premises or consolidating debts, rather than urgent short-term gaps.

Materially. Secured business loans backed by property in Australia are typically priced in the single digits, while unsecured business loans commonly run from around 10 per cent to well over 20 per cent because the lender carries more risk. Secured loans also run over longer terms, up to 15 years or more, so the repayment is lower again. The trade-off is time and cost to set up: a valuation, legal work and a slower approval, so the saving needs to outweigh those for smaller or short-term amounts.

Allow two to six weeks. The lender needs a valuation of the security, which takes one to two weeks for residential property and longer for commercial, then reviews financials and prepares mortgage documents. Non-bank lenders can be faster, sometimes within a week where a recent valuation exists. If the funding is urgent, your broker may arrange a short-term unsecured facility first and refinance it into the secured loan once it settles.

Full-doc secured loans typically need two years of business financials and tax returns, recent BAS, business bank statements, a statement of your assets and liabilities, and details of the security property including any existing mortgage. Low-doc secured loans replace the financials with an accountant’s declaration or bank statements and are priced a little higher. The lender also requires identification for all directors and guarantors and evidence that the business purpose is genuine.

Yes. Consolidating several short-term unsecured facilities, equipment loans or an ATO payment arrangement into one secured loan is a common use, because it replaces high-rate, short-term repayments with a single lower repayment over a longer term. The total interest over the life of the new loan can still be higher if the term is much longer, so your broker shows the monthly saving and the total cost side by side before you decide.

The lender can enforce its security, which for property means the right to sell it to recover the debt after formal default steps and notice periods set out in the loan agreement and in law. Any guarantors are also liable for a shortfall. In practice lenders prefer to work out a solution first, so contact your broker or the lender as soon as trading changes. Understanding this before you sign is exactly why your broker explains the security and guarantee terms in plain English.

Residential property is the most widely accepted security and attracts the best pricing, followed by commercial property. Some lenders also take unencumbered equipment, vehicles or trucks, term deposits, or a general security agreement over all business assets. The lender values the security and lends a proportion of that value, typically up to 80 per cent for residential property and less for commercial property or equipment. Your broker matches the security you have to lenders that accept it.

Yes, and it is the most common form of security for small business borrowing in Australia. The lender takes a mortgage over the home, usually behind your existing home loan as a second mortgage or by refinancing the home loan and adding the business borrowing. The equity available is generally the property value less existing loans, up to a lending limit of around 80 per cent. Using your home puts it at risk if the business cannot repay, so your broker explains the implications and any alternatives before you proceed.

Not necessarily. Unsecured consolidation loans are available for profitable businesses, typically up to a few hundred thousand dollars, priced on trading history and cash flow. Offering property security allows larger amounts, longer terms and a much lower rate, which usually makes the consolidation work harder. Lenders will also want to see that the debts being refinanced were for business purposes and that the business can support the new repayment.

Yes, with the landlord’s consent to the installation. Lenders finance solar on leased premises where the lease term covers the finance term, and some structure the system so it can be removed or transferred. Owner-occupiers can alternatively fund solar through a secured business loan against the property.