What can I use as security for a business loan?

What does “security” actually mean?

Security is something a lender can rely on if a loan isn’t repaid. It gives the lender a legal right over an asset, which reduces its risk and usually means it can lend more, for longer, on better terms. In Australian business lending, security falls into three broad groups:

1. Real property — land and buildings, secured by a registered mortgage or a caveat on the title.
2. Personal property — business assets such as vehicles, machinery, equipment, stock and receivables, secured by a registration on the Personal Property Securities Register (PPSR).
3. Personal support — guarantees from directors, owners or related parties.

Many loans combine more than one. A company borrowing against a director’s home, for example, might have a mortgage over the home, a general security agreement over the company’s assets and a guarantee from the director.

Which kinds of property can secure a business loan?

Property type	How lenders tend to view it
Owner-occupied home	Widely accepted; everyone on title must be involved
Residential investment property	Widely accepted; tenancy doesn’t usually stop a loan
Commercial property (shops, offices, warehouses)	Accepted; often assessed more conservatively than houses
Vacant land	Accepted by some lenders, usually with lower limits
Rural and specialised property	Case by case; depends heavily on location and use

Property-secured business loans range from $20,000 to $5,000,000. How much a specific property supports depends on its value and what’s already owed on it — see how much equity you can borrow against for a step-by-step estimate.

How do business assets work as security?

When a lender takes security over personal property — anything that isn’t land or buildings — it registers its interest on the PPSR. The register is a public noticeboard that tells anyone searching that the lender has a claim over that asset.

Common business assets used this way:

• Vehicles: utes, vans, trucks, cars used in the business.
• Machinery and equipment: excavators, CNC machines, commercial kitchens, medical equipment.
• Stock and receivables: usually through a general security agreement rather than item by item.

Assets that hold their resale value well and are easy to identify — a late-model truck with a serial number, say — support more borrowing than specialised or fast-depreciating items. For purchases specifically, read borrowing to buy equipment.

Where do guarantees fit in?

A personal guarantee is a promise by a person — usually a director or owner — to repay the business’s debt if the business can’t. It’s not tied to a specific asset, but if it’s called on, the lender can pursue the guarantor personally.

Guarantees are common even on property-secured loans, and almost universal on unsecured business lending to companies. Before signing one, ask:

• Is the guarantee limited to a set amount, or unlimited?
• Does it cover only this loan, or all present and future debts to the lender?
• What happens to it when the loan is repaid?

If you’re about to take on a guarantee and want to understand the full picture, a real person can talk it through when you send an enquiry — there’s no credit check at that stage.

What if I have no security at all?

Then unsecured finance is the natural starting point. Trading businesses can typically access $5,000 to $500,000 through unsecured loans, cash-flow loans or lines of credit, sized on turnover and bank statements instead of assets. The detail is in borrowing without property.

If turnover alone won’t support what you need, it’s worth asking whether anyone connected to the business — a director, a partner, a family member — has property they’d consider offering. That decision deserves care; it’s not something to rush.

What security is usually not accepted?

Lenders vary, but these are commonly difficult or unacceptable:

• Assets you don’t fully own, such as leased equipment or a car still under finance with another lender (unless that finance is being paid out).
• Property owned by someone who isn’t part of the loan and hasn’t agreed to be.
• Superannuation, which generally can’t be used to secure a business loan.
• Very specialised items with no ready resale market.
• Future income that isn’t contracted, like expected sales.

How does security affect the price and speed of a loan?

Stronger security usually means:

• More choice of lenders and structures.
• Longer terms, so each repayment is smaller.
• More flexibility on credit history and trading time.

It can also add steps. A mortgage needs a valuation, title searches and settlement paperwork, which takes longer than a purely unsecured facility — see what happens at settlement. Whether that trade-off is worth it depends on how much you need and how quickly.

How should I choose what to offer?

Start with the smallest security that comfortably supports the loan you actually need. Offering more than necessary can tie up property that you may want to use later. Ask these three questions:

1. Does this asset, on its own, support the amount?
2. Would losing it be survivable if things went badly?
3. Does everyone with an interest in it understand and agree?

If the answers point in different directions, talk it through before deciding. Our comparison of secured and unsecured loans may help frame the choice.

Talk through your security options, no obligation

Security decisions are easier with someone who sees them every day. There’s no credit check when you first enquire, your details aren’t circulated around a network of lenders, and a real person looks at what you own, what you need and what makes sense to offer. Please be accurate about property ownership and existing loans on the form so the options you hear actually fit.

Ask a specialist about your security →