Secured Business Loans from 6.99% p.a.

How Secured Business Loans Work

A secured business loan uses an asset you own as collateral against the borrowed amount. This security gives the lender a legal claim over the asset, which they can sell to recover the debt if you default. In exchange for this reduced risk, lenders reward you with significantly lower interest rates, higher borrowing limits, and more flexible repayment terms.

The most common form of security is residential property, which typically secures the best rates. Lenders will have the property valued by a licensed valuer and will lend up to a percentage of its value, known as the Loan-to-Value Ratio (LVR). For residential property, LVRs of up to 80% are standard, meaning if your property is valued at $1 million, you could potentially borrow up to $800,000.

Commercial property can also be used as security, though LVRs are generally lower at 65% to 70%. Equipment, motor vehicles, and term deposits are other acceptable forms of security, though the borrowing capacity and rates will vary based on the asset type and condition.

Why Choose a Secured Business Loan?

The primary advantage of secured business lending is cost. Rates for secured business loans start from 6.99% p.a. compared to 7.99% or higher for unsecured alternatives. Over the life of a large loan, this rate difference can save your business tens of thousands of dollars in interest.

Secured loans also offer access to larger amounts. While unsecured business loans typically cap at $500,000, secured loans can reach $5 million or more depending on the value of your security. The longer available terms (up to 25 years for property-secured loans) also mean lower monthly repayments, freeing up cash flow for business operations.

For established businesses with property equity, a secured business loan is often the most cost-effective way to fund major expansions, acquisitions, commercial property purchases, or large-scale equipment investments. The lower repayments also make it easier to pass lender serviceability tests, increasing your chances of approval for larger amounts.

Types of Security Accepted

Australian business lenders accept a range of assets as security, each with different LVRs and rate implications:

• Residential property: Up to 80% LVR, best rates available, most widely accepted
• Commercial property: Up to 65-70% LVR, requires specialist valuation, slightly higher rates
• Equipment and vehicles: Up to 100% of asset value for new equipment, lower for used
• Term deposits: Up to 100% of deposit value, near-cash security gets excellent rates
• Share portfolios: Some lenders accept listed shares at 50-70% of portfolio value

You can also use a combination of assets to increase your total borrowing capacity. For example, you might use a residential property as primary security and business equipment as additional security to secure a larger facility.

Risks to Consider

The most significant risk of a secured business loan is that you could lose the secured asset if your business fails to meet repayment obligations. This risk is particularly important when using your family home as security for a business loan. Before proceeding, we strongly recommend getting independent legal and financial advice.

Under Australian Consumer Law and the National Credit Code, lenders are required to ensure the loan is not unsuitable for your circumstances. However, many business loans are exempt from the National Credit Code, so it is important to understand your rights and obligations before signing. Our brokers will walk you through all the implications and ensure you understand the commitment.