Comparing business loans by security: with or without property

The security behind a loan shapes almost everything else about it: how much you can borrow, how long you get to repay, what it costs and what happens if things go badly. This page sets the three security groups side by side, so you can decide what you’re prepared to put behind the business.

What are the three security groups?

1. Unsecured. Nothing specific is mortgaged. The lender relies on trading, credit history and, usually, a director’s personal guarantee.
2. Asset-backed. The thing being funded is the security: a vehicle, machine or your unpaid invoices.
3. Property-backed. A home or commercial property is used through a first mortgage, second mortgage or caveat.

How do they compare?

	Unsecured	Asset-backed	Property-backed
Typical size	$5k to $500k	Matched to the asset or ledger	$20k to $5m
Term	Shorter	Matched to asset life	Longer
Relative cost	Higher	Moderate	Lower pricing, more upfront fees
Speed	Often quick	Moderate	Slower, except caveat loans
What’s at stake	Guarantee, sometimes business assets	The asset	The property
Credit tolerance	Moderate	Moderate	Highest

When does each make sense?

Unsecured suits a smaller, shorter need when you’d rather not put property on the line, or don’t own any. See unsecured business loans.

Asset-backed suits buying something that holds value, like a vehicle or machine, or funding a sales ledger with reliable customers. See equipment finance and invoice finance.

Property-backed suits larger amounts, longer purposes, weaker credit files, or when repayments need to be lower. See secured business loans.

What does “unsecured” still put at risk?

Unsecured doesn’t mean nothing is at stake:

• Personal guarantees make directors personally liable.
• General security agreements can give a lender rights over business assets.
• Default can lead to legal action and a credit listing.

Our guarantees and security page explains what you’re signing in each case.

How do you decide how much security to offer?

Ask three questions:

• How much do I need, and for how long? Large or long needs point to property.
• What could go wrong? If the business had a bad year, could I keep paying?
• Who else is affected? A family home involves more than the borrower.

Illustrative example. Two Adelaide café owners each need $80,000. One owns her home outright and wants low repayments over five years; a property-backed loan suits her. The other rents and would rather keep his partner’s name off any loan; an unsecured loan over two years with higher repayments suits him better. Both are sensible. The right answer depends on what each is willing to put at stake.

What extra costs come with security?

Property-backed loans add valuation, legal, title search, registration and discharge costs. Asset-backed finance may require comprehensive insurance and PPSR registration. Include these when comparing; see fees.

Who else is affected by the security you offer?

Security decisions rarely affect only the borrower. Before offering property or signing guarantees, think about everyone involved:

• Co-owners of a property. Everyone on the title must agree and sign, and everyone shares the risk.
• A spouse or partner asked to guarantee, even if they’re not involved in the business.
• Family members offering their own property as security.
• Business partners, who may be jointly liable under guarantees.
• Future lenders, who will see existing registrations on the PPSR and title.

Who	What they should know before signing
Co-owner of the property	The property can be sold if the loan isn’t repaid
Guarantor spouse	They can be pursued personally for the debt
Family member offering security	Their property is at risk; independent advice is essential
Business partner	Joint guarantees can make each liable for the whole debt

Many lenders require third-party guarantors and security providers to get independent legal advice before signing. Even when they don’t insist, it’s wise. A conversation about risk before the loan is far easier than one after a missed payment.

Talk through what you’re comfortable putting forward

It helps to see the options with and without security priced side by side. Asking us won’t touch your credit file; a check only comes up once you decide to proceed. We don’t push your details out to a list of lenders. A real person compares an unsecured, asset-backed and property-backed route for your situation and is plain about the risks of each.

Please be accurate on the form about any property and what’s owed on it. Start your enquiry, or tell the comparison tool whether property is available and then see if you qualify.