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Video · 1:36

Secured vs unsecured business loans: when each one fits

1:36 · Posted 5 February 2019 on the HomeSec YouTube channel

Paul Stone explains in about a minute when an unsecured business loan fits, when a loan secured against property is the better option, and what to do if unsecured is not available.

The difference in one table's worth

  • Unsecured relies on turnover and trading history, is usually tens of thousands of dollars, and is commonly repaid by daily or weekly direct debit over a fixed term.
  • Secured by property relies on equity and a credible exit, runs from $20,000 to $5,000,000, and is substantially cheaper. At HomeSec the term is open and repayments are interest-only, or interest capitalised for up to 6 months.

What most borrowers get wrong

“Unsecured” means no mortgage over real property. It does not mean no security. Most unsecured business loans come with a general security agreement over the company and a director's personal guarantee, which together reach the company's assets and your own.

When unsecured is not available

If the business owns property, or a director does, a property-secured loan is the alternative: assessed on the equity and the exit rather than on the last year's trading.

The full guide

The video is the short version. The written guide has the detail: secured versus unsecured business loans, in full.

To talk it through about your own property, ring a Lending Manager on 1300 93 83 87, Mon–Fri, 8:30am – 5:30pm Melbourne time.

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