Secured Business Loans

Fuel your aspirations with secured business loans in Australia. Armed with decades of financial expertise and a comprehensive understanding of the Australian finance landscape, we’re here to guide you toward achieving your business dreams. Escalating your business to unprecedented heights often involves securing the appropriate financing and navigating complex regulations—two areas we can help with. A secured business loan, consisting of borrowing funds against your assets, significantly minimizes the lender’s risk.

Low Interest Rates

Quick Business Loan

Same Day Approvals

No Hidden Fees

Hassle Free Process

Serving Since 2001

Lending All Across Australia

Let secured business loans propel you past your competition and streamline your operations.

What is a Secured Business Loan?

As the name suggests, a secured business loan requires collateral—assets that the lender can seize if loan repayments falter. Such business loans can be invaluable to smaller businesses with assets like cash savings, equipment, or real estate that can be used as collateral.

How it works in Australia?

In the Australian context, “secured” refers to loans backed by assets or property. While properties often serve as collateral, it is also customary to use valuable business assets. If the borrower defaults on loan repayments, the lender can sell the property and recoup the loan amount. Any surplus from the asset sale above the unpaid loan amount is legally owed to the borrower.

Applying for a Secured Small Finance in Australia

The primary considerations for secured business loans lie in the collateral. The lender assesses the asset’s value to determine if it could cover the loan amount in case of a borrower defaults. The application process involves submitting several documents, including proof of income generated by the asset, documents confirming ownership, details of any existing loans on the asset, registered documents verifying the asset’s value, and a copy of the insurance policy on the asset.

Assets as Collateral for Secured Business Loans

Assets commonly used as collateral in securing business loans typically include residential and commercial properties.

However, various assets may be collateral, provided the lender considers their value sufficient. Such assets could include:

  • Commercial property
  • Residential property
  • Rural property
  • Commercial vehicles
  • Business equipment
  • Commercial Construction
  • Business inventory
  • Future invoices (Invoice Financing)
  • The business as a whole for purchase credit

When a movable asset is used as collateral (like a company vehicle), it is commonly secured using a chattel mortgage. This denotes a charge on an asset that, unlike a property, is not fixed.

Secured vs Unsecured Business Loans: A Comparative Analysis

Secured and unsecured business loans come with their unique features and distinctions:

Secured Business Loans

  • Business or personal items are required as collateral.
  • Loan amounts are typically determined by the value of the borrower’s assets.
  • They tend to be more cost-effective than unsecured business loans.
  • They may facilitate larger loans for businesses.
  • They may involve professional expenses, such as used farming equipment or a company vehicle when an asset is worth it.
  • Acquiring secured business loans tends to be more time-consuming than obtaining unsecured business loans.
  • You must repay the loan to avoid losing the collateral.

 

Unsecured Business Loans

  • Unsecured business loans are primarily based on business credit scores and cash flow, with no assets required as collateral.
  • They generally offer lower interest rates and are more costly than secured business loans.
  • The director may need to provide a personal guarantee.
  • Lower loan amounts typically have to be repaid over a shorter period.
  • They offer fast application and processing times.

Pros and Cons of Secured Business Loans

Advantages

  • Lower interest rates: The lower risk to the lender, backed by collateral, often results in lower interest rates.
  • Security: The collateral offered determines the loan duration. For example, commercial property could secure loans for up to 30 years.
  • Flexible loan options: Applicants can apply for multiple secured business loans.
  • Easy loan processing: An asset with an assessed value simplifies qualification for unsecured business credit.
  • Higher loan amounts: The lower risk and greater flexibility often result in larger loans.

Disadvantages

  • Your personal property used as collateral could be at risk.
  • Typically, the loan is designated for a specific purchase, such as a house or vehicle.
  • In financial difficulties, the lender can confiscate the property if the loan cannot be repaid.

Ready to proceed?

Contact us and we will make the business finance process very simple and easy for you!

Flexibility

With flexible options up funding is possible in 24 hours

Support

Common sense credit approval process. Fast and fuss free funding on your terms

Confidence

No hidden fees and or charges. Clear & upfront pricing

Case Study: Secured Business Loan in Melbourne

We have several success stories from clients who secured business loans through our services. One such client from Brisbane was denied a loan from a conventional bank. After connecting with our team, we quickly assessed his situation, found he met our criteria, secured the loan approval, and credited him to his account. Another client from Melbourne required a loan amount of $250,000 to purchase business vehicles. Once again, we assessed his case, connected him with one of our private lenders, and secured the business loan credited to his account within 48 hours.

Conclusion: Should You Go For It?

Deciding whether to go for a secured business loan depends heavily on your unique business needs and circumstances. It can be a wise choice if your business has valuable assets that can be used as collateral, and you’re confident in your ability to meet repayment obligations. The potential benefits—lower interest rates, larger loan amounts, and loan terms—can be substantial. However, it’s important to keep in mind the risk involved—if your business defaults on the loan, you could lose your collateral. So, ensure you weigh the pros and cons carefully before proceeding.

At Basic Finance Loans, we work with many investors and lenders, ranging from non-bank private lenders to conventional banks. We can assist with various loan types across all parts of Australia. Don’t hesitate to contact us for a free assessment at any time.

Frequently Asked Questions (FAQs)

What is a secured business loan?

A secured business loan is a type of loan where the borrower provides an asset as collateral to secure the loan. This collateral could be anything of value the business owns, like real estate, equipment, or even future invoices. The collateral reduces the risk for the lender, which often results in lower interest rates than unsecured loans. However, if the borrower defaults on the loan, the lender has the right to seize and sell the collateral to recover the loan amount.

How much can I borrow?

The loan amount you can borrow is based on the lender’s assessment of the value of your provided security.

What is the minimum deposit/documentation required?

Secured loans work by using equity as collateral for the loan. Documentation regarding equity is typically required.

What is an interest rate?

Secured business loans typically offer an attractive interest rate of 13% to 16% P.A.

What if I don't have an asset?

In addition to residential or commercial property, your savings, guarantees, and invoices can also serve as security for a secured business loan.

Do business loans need to be secured?

Not all business loans need to be secured. While secured loans often provide more significant amounts and lower interest rates due to the reduced risk for the lender, many unsecured loan options are available for businesses. These typically rely on the borrower’s credit score, business history, and cash flow for approval and may carry higher interest rates. The choice between secured and unsecured loans usually depends on the business’s needs, the value of assets available for collateral, and financial health.

Is a small business loan secured or unsecured?

Small business loans can be either secured or unsecured. A secured business loan requires collateral (such as property, equipment, or other assets) that the lender can seize if the borrower fails to repay the loan. On the other hand, an unsecured business loan doesn’t require collateral but relies on the borrower’s creditworthiness. Typically, unsecured loans carry higher interest rates to compensate for the increased risk to the lender.

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