Can you secure all business loans against an asset or property
Not every business loan can be secured against property, and not every lender that accepts property will accept yours. HomeSec lends against residential, commercial, industrial, rural residential and vacant land anywhere in Australia, to 80% of value on residential security and 70% on commercial, in first or second position, without requiring a sworn valuation or financial statements.
No — and the distinctions matter more than most borrowers realise, because they determine both who will lend to you and what happens if things go wrong.
What “secured” actually means
A secured loan gives the lender a legal interest in a specific asset. If the loan is not repaid, the lender can look to that asset. That is the whole mechanism, and everything else follows from it: secured lending is generally cheaper, larger and slower to arrange than unsecured lending, because there is something behind it that has to be checked and documented.
What can be taken as security varies enormously by lender, and the variation is where people get stuck.
Real property
Land and buildings. The strongest and most widely accepted form of security in Australia, because the Torrens title system makes ownership and competing interests a matter of public record.
HomeSec lends against residential, commercial, industrial, rural residential and vacant land, anywhere in Australia including regional and rural areas — to 80% of value on residential security and 70% on commercial, in first or second position on the title.
Two things we do differently from most: no sworn valuation is required, because we form our own view of the security; and we lend well outside the capital cities, where a lot of private lenders quietly decline anything more than an hour from a CBD.
Specific assets — plant, equipment, vehicles
Financed against the asset itself, through a chattel mortgage, hire purchase or lease. Registered on the Personal Property Securities Register rather than on a land title.
We do not write this. If you need equipment finance specifically, an asset financier is the right lender and we will say so. What we can do is fund the purchase against property equity instead, which means you own the equipment outright from day one with no financier’s interest registered against it.
Book debts, inventory, and a general company charge
Invoice finance takes your receivables. A general security agreement takes essentially everything the company owns. Both are common in bank lending and both are considerably more intrusive than a mortgage over one property, because they attach to assets you use daily.
Personal guarantees are not security
Worth stating plainly, because they are often described as though they were. A guarantee is a promise, not an asset. It gives a lender a claim against you personally, which may be worth a great deal or nothing at all. A lender relying mainly on guarantees is not really secured.
What decides whether your property works
Four things, and the fourth is the one that gets underestimated:
- Title. Held in your name, your company’s or your trust’s. Existing caveats, writs or Family Court orders have to be dealt with first.
- Equity. Combined lending within 80% residential or 70% commercial.
- Purpose. Business or investment. We do not write personal, domestic or household purposes.
- The exit. How the loan gets repaid. Dated and documented beats intended, every time.
Notably absent: financial statements, tax returns, BAS, a trading history and a clean credit file. None of those are required, because the security and the exit carry the risk rather than your profit and loss.
Reviewed by Jason Brockmuller, Joint Chief Executive