The Complete Guide to Secured Business Loans in Australia 2025

Secured finance underpins how Australian businesses fund growth, smooth cash flow, consolidate debt, and solve timing gaps. 

During and after the government’s SME Loan Guarantee Schemes, Australian SMEs accessed ~109,000 loans worth about $16.5 billion as at 30 June 2024—evidence that secured (and government-supported) lending is a core lever for business liquidity and growth.

This guide explains secured business loans in simple to understand terms. You’ll get the structures, legal mechanics, credit logic, pricing drivers, and a step-by-step process to get funded—fast and safely.

What a secured business loan is (and why lenders prefer it)

A secured business loan is credit backed by collateral—an asset the lender can take control of if the loan isn’t repaid. The collateral reduces the lender’s loss if things go wrong, so they’re willing to lend more, at sharper rates, with longer terms than unsecured options.

Security can be:

• Real property: commercial or residential property with equity available.
• Specific assets: vehicles, yellow goods, plant and equipment.
• All-assets security (GSA/AllPAAP): a General Security Agreement over all present and after-acquired property of the borrower.
• Receivables or inventory: where margins, controls and reporting allow.
• Cash or term deposits: common for short-term bridge facilities.
  

The legal right to that security is perfected on the PPSR (Personal Property Securities Register) for personal property and via mortgage registrations for real property. Priority is determined by registration time and intercreditor arrangements. We’ll unpack that below.

Where secured loans fit in your capital stack

Think of business funding as layers:

• Senior secured: first ranking security (e.g., first mortgage + GSA). Cheapest money.
• Second ranking / mezzanine: second mortgage or second-ranking GSA. More expensive, often shorter term.
• Unsecured: working capital lines, credit cards, merchant advances. Fast but costly.
• Equity: dilution, no repayments, but permanent.
  

Your goal: match risk, use of funds, and tenor to the correct layer. Use the cheapest, safest layer that still gets the job done.

Common secured products in Australia

1) First-mortgage business loan

• Security: first mortgage over real property; often with a GSA for full coverage.
• Use cases: acquisition, expansion, refinance from expensive facilities, working capital with amortisation.
• Pricing: lowest in the secured set; ADIs price off benchmark rates; non-banks price off cost of funds + margin.
  

2) Second-mortgage / mezzanine loan

• Security: second mortgage behind a bank first; may include a second-ranking GSA.
• Use cases: top-up capital where the bank won’t extend; time-sensitive opportunities; tax arrears clean-up before a refinance.
• Considerations: requires Deed of Priority with the first mortgagee to define standstill and enforcement rights.
  

3) Caveat loan (short-term, property-backed)

• Security: caveat and usually a subsequent formal mortgage or equitable mortgage; always understand documentation.
• Use cases: urgent cash flow, bridging a timed settlement, paying critical creditors or the ATO to avoid escalation.
• Speed: often 24–72 hours from complete file.
• Risk: higher cost, strict exit plan required.
  

4) Secured working capital (GSA / AllPAAP)

• Security: GSA over business assets, sometimes with specific asset schedules.
• Use cases: inventory build, seasonal ramp, trade cycles longer than payables cycles.
• Controls: reporting covenants, stock audits, receivables concentration limits, lockbox accounts.
  

5) Equipment finance (chattel mortgage / finance lease)

• Security: the asset being funded; PPSR registration and title terms.
• Use cases: revenue-generating assets with known resale value and depreciation profile.
  

6) Invoice finance (recourse or non-recourse)

• Security: receivables and GSA; sometimes a property top-up to sharpen pricing.
• Use cases: long debtor days, big customers with defined acceptance milestones.
  

7) Bridging finance

• Security: property; short tenor with clear exit (refinance or sale).
• Use cases: acquire first, sell later; settle while the bank completion drags.
  

Who uses secured loans—and when

• Growing SMEs: step-change capex, new site fit-outs, hiring into known demand.
• Contracted revenue businesses: front-loading costs before milestone payments.
• Stressed but viable: restructure high-cost debt into a single secured facility; stabilise and refinance.
• Property-rich–cash-poor owners: equity release for expansion or consolidation.
• Seasonal operators: agriculture, wholesale, retail importers.
  

Australian legal and regulatory context (what actually matters)

• NCCP Act: Consumer credit regulation typically doesn’t apply to genuine business-purpose loans. Lenders still assess suitability and affordability.
• Corporations Act & PPSA: governs security interests, director duties, and enforcement.
• PPSR: register security interests over personal property. Priority is mostly first to register—but intercreditor deeds can reorder rights.
• Mortgages & titles: state-based land titles systems for real property security.
• AML/CTF: AUSTRAC KYC, source of funds/wealth checks, and monitoring apply.
• Director guarantees: standard for private businesses; increases lender recourse, may sharpen pricing.
  

Credit assessment: how lenders actually decide

Lenders don’t “like” or “dislike” deals—they rate risk. Here’s the core of that rating:

1) Security position

• LVR (Loan-to-Value Ratio): total secured debt ÷ forced-sale or fair-market value.
• Evidence: independent valuation for property; wholesale/retail value for plant; aged debtor ledgers.
  

2) Serviceability

• DSCR (Debt Service Coverage Ratio): EBITDA (or adjusted free cash flow) ÷ total debt service.
• ICR (Interest Cover Ratio): EBIT ÷ interest.
• Sensitivity: rate shocks, revenue downside, cost creep.
  

3) Business quality

• Margins, customer concentration, churn, order book, supply chain risk, management track record.
• External signals: ATO arrears, defaults, director history.
  

4) Exit clarity (for short-term deals)

• Refinance pathway with milestones.
• Identified sale of asset or debtor collections with buffers.
  

If the security is strong, lenders can tolerate lower serviceability; if cash flow is strong, lenders may tolerate lower equity. Balanced deals price best.

Pricing: what sets your rate and fees

• Cost of funds: ADIs draw from deposits and wholesale markets; non-banks from securitisation, warehouse lines, and investor mandates.
• Risk margin: driven by LVR, DSCR, sector risk, loan size, and information quality.
• Term and structure: longer tenor with amortisation prices better than bullet short-terms—unless asset lives don’t match.
• Ranking: first mortgage < second mortgage < caveat in cost hierarchy.
• Fees you’ll see: establishment fee, legal costs, valuation costs, line fees for unused limits, exit or break fees (for fixed-rate money), PPSR fees, and title registration fees.
  

The documents you’ll be asked for (prepare once, reuse often)

• Corporate: ABN/ACN, constitution or trust deed, shareholder structure, director IDs.
• Financials: last 2 years financial statements, YTD managements, BAS for 4–8 quarters, ATO portal snapshot (including any payment plans).
• Banking: 6–12 months statements; merchant statements if relevant.
• Aged summaries: debtors and creditors; top 10 customers.
• Asset evidence: valuation reports, asset registers, invoices and serial numbers for equipment.
• Use of funds: itemised—who gets paid, when, why, with proofs (e.g., payout letters).
• Exit plan (if short-term): refinance term sheets, sale contracts, or timetable to bankable position.
  

A complete pack is the single biggest lever on speed and price.

The legal mechanics that protect you and the lender

PPSR perfection

• Lender registers a GSA or specific security interest against the correct grantor (company or trustee).
• Accuracy matters: wrong ACN/ABN, wrong collateral class, or late registration can void priority.
  

Mortgages and caveats

• Real property security is registered on title; caveats can be an interim step but shouldn’t be the whole plan.
• Deed of Priority: if there’s existing debt, this deed decides who gets paid first and who must wait in a default.
  

Director guarantees

• Almost standard for private companies. Limit the guarantee if possible and understand the triggers.
  

Negative pledge & covenants

• Don’t grant other security without consent; maintain insurances; keep taxes current; keep leverage within agreed bands.
  

Get your solicitor to review every binding document. Small clauses matter at enforcement time.

Risk management for borrowers

• Match term to purpose: Do not fund long-life assets with 6-month money unless you have a real exit.
• Stress test: Add 2–3% to interest rates, push out debtor days, shave gross margin—does DSCR still hold?
• Keep the ATO clean: Tax arrears spook lenders; a formal plan helps if you’re in catch-up mode.
• Do not over-gear property: Leave headroom for valuation swings and refinance tests.
• Watch cross-collateralisation: Convenient upfront, restrictive later. Know which assets secure which loans.
• Record-keeping: Tight bookkeeping isn’t admin—it’s cost of capital.
  

When a secured loan beats equity—or doesn’t

Debt wins when

• The project has predictable payback and collateral support.
• You want to keep ownership and upside.
• You can refinance to cheaper money after a stabilisation period.
  

Equity wins when

• Cash flows are uncertain and assets are light.
• You need the investor’s capability as much as their cash.
• Leverage would push solvency risk too high.
  

A blended route—small equity plus a secured facility—often yields the best weighted cost of capital.

How to choose the right secured product (decision path)

1. Define use of funds precisely (not “working capital”—say “$480k for inventory build for PO #1189; $220k to clear two merchant advances; $150k for seasonal staff”).
   Map the exit: refinance to bank in 9–12 months? debtor collections? asset sale? model it.
2. Identify collateral: property equity, equipment with resale value, receivables quality.
3. Pick ranking: first mortgage if available; otherwise second with clear intercreditor terms; caveat only if truly short term.
4. Fit tenor to purpose: match asset life and cash conversion cycle.
5. Package a clean file: lenders price speed and certainty.
   Obtain competing term sheets: compare all-in cost, covenants, information undertakings, prepayment options, and fees—never headline rate alone.
6. Negotiate priority if you’re behind a bank: get the deed in draft early; it’s the silent timing killer.
   

Rate ranges (indicative only, market-driven)

• First-mortgage business loans (ADIs): sharpest end of the market; pricing moves with monetary policy and risk bands.
• First-mortgage non-bank: higher than banks, faster, more flexible on documentation and covenants.
• Second-mortgage / mezzanine: materially higher; short term; strong focus on LVR and exit.
• Caveat loans: highest cost; pure bridge; priced for speed and risk.
  

Your file quality and story shift you within each range more than you think.

Valuations, LVR and “haircuts”

Lenders don’t lend against wishful valuations. Expect:

• Residential property: as-is value with conservative forced-sale haircuts for short-term loans.
• Commercial property: income-capitalised, market comparable, and vacant possession sensitivities.
• Plant/equipment: wholesale or orderly liquidation value, not retail list price.
• Receivables: in-eligibles excluded (aged, disputed, related-party, foreign without controls).
  Inventory: haircut for obsolescence and realisable value; may require field audits.
  

Lower haircuts come from evidence: third-party valuations, contracts on foot, and insurer confirmations.

Intercreditor reality: deeds of priority

If you’re placing a second mortgage behind a bank, the Deed of Priority decides your deal’s life:

• Standstill: how long the junior lender must wait to enforce after default.
• Payment waterfalls: who gets what from asset sale or refinance.
• Cure rights: can the junior cure a senior default to stop enforcement?
• Consent: what the senior must approve (new debt, asset sales, distributions).
  

Start this conversation early. It’s the most common delay on otherwise bankable seconds.

Build an exit that actually works

Short-term money is fine if the pathway is real:

• Refinance to bank: hit serviceability gates—clean ATO, stabilised EBITDA, acceptable leverage, and property valuation that passes the bank’s test.
• Sale proceeds: signed contract, settlement timetable, and buffer for slippage.
• Operational cash generation: schedule that pays down principal as gross margin lands.
  

If you can’t write the exit on one page with dates and numbers, the facility isn’t ready.

Step-by-step: from enquiry to settlement (in days, not weeks)

1. Pre-screen

• 15-minute call to confirm purpose, amount, collateral, timing, and exit.
• Gather the minimum pack: IDs/KYC, ATO summary, BAS, bank statements, property details, payout figures.
  

2. Term sheet & credit pack

• Provide a clean narrative: use of funds, security, serviceability, and exit.
• Lender issues a non-binding term sheet with headline rate, LVR, fees, covenants, conditions precedent.
  

3. Due diligence

• Valuation ordered (where required).
• PPSR and title checks.
• Drafts of GSA, mortgage, guarantees, and priority deed (if needed).
  

4. Legals & settlement

• You sign documents; conditions precedent ticked (payout letters, insurance certificates, company resolutions).
• Lender registers security and funds per a settlement statement.
• Post-settlement: you meet ongoing reporting covenants (e.g., BAS, managements, aged ledgers).
  

Tight files fund faster, often inside these windows.

Case study: consolidating short-term debt into one secured facility

Scenario: A wholesaler carried multiple short-term cash-advance products at double-digit monthly costs. Margins were healthy but erratic cash flow made planning impossible.

Solution: Second-mortgage facility against the director’s investment property, plus a GSA. Loan paid out the advances, cleared ATO arrears, and provided a seasonal inventory line.

Outcomes:

• Average funding cost cut by more than half.
• Single monthly repayment matched to debtor collections.
• In month 6, refinance term sheet from a major bank conditional on stable DSCR and cleared tax.
  

The same revenue with a cleaner capital stack turned chaos into a controllable plan.

Alternatives to consider (and when to use them)

• Unsecured working capital: if you need small amounts quickly and can repay inside 3–6 months.
• Trade finance / documentary instruments: if your risk sits in cross-border shipping and supplier terms.
• Equity or convertible notes: if asset-light with high growth uncertainty.
• Sale-and-leaseback: if you need to unlock cash from owned equipment.
• Invoice finance: if debtor days, not margins, are the bottleneck.
  

The right choice is the one that reduces total cost and execution risk for your plan—not just the lowest rate.

Red flags that will hurt price—or kill a deal

• Unexplained ATO debt without a payment plan.
• Round-tripped sales, large related-party transactions, or off-book liabilities.
• Valuation gaps between what you think the asset is worth and market reality.
• Cash flow volatility with no mitigations (order backlog, contracts, hedges).
• Priority conflicts with an existing lender and no path to a deed.
• Missing insurances, expired registrations, or lapsed PPSR filings.
  

Fix what you can before you apply.

Practical negotiation tips

• Ask for all-in pricing (rate + establishment + legal + valuation + line + exit).
• Request prepayment flexibility or a step-down fee grid if you plan to refinance early.
• Cap third-party legal and valuation costs where possible.
• Clarify financial covenants (DSCR, ICR, leverage) and what constitutes default.
• Negotiate information undertakings—what you must report and how often.
• If you’re offering extra collateral to sharpen price, ask how many basis points that actually buys you.
  

Frequently asked questions

Is a director’s guarantee always required?
Almost always for private companies. It aligns incentives and reduces loss-given-default for the lender, which can improve pricing.

What LVR will a lender accept?
Depends on asset class, liquidity and loan type. First mortgages allow higher LVRs than second mortgages or caveats. Expect conservative LVRs for short-term money.

Do I need a valuation?
For property-backed facilities, yes—independent, lender-approved valuers. For equipment, wholesale/resale values; for receivables, eligibility tests and concentration limits.

How quickly can I settle?
With a complete file and cooperative counterparties, short-term property-backed deals can settle in days. Intercreditor deeds or complex titles extend timelines.

What if I have ATO arrears?
Disclose it. A formal payment plan helps. Many consolidation deals exist to clear tax and restore bankability.

Will a secured loan improve cash flow?
Yes, if you replace multiple expensive short-term liabilities with a single, cheaper, longer-dated facility that matches how your cash converts.

Glossary (tight definitions that lenders actually use)

• AllPAAP / GSA: General Security Agreement over All Present and After-Acquired Property.
• APRA/ADI: Prudential regulator / Authorised Deposit-taking Institution (banks, etc.).
• ATO arrears: Overdue tax obligations; critical signal for lenders.
• Caveat: A notice on title that someone claims an interest in property; often interim.
• Deed of Priority: Agreement between lenders setting enforcement order and standstill rules.
• DSCR / ICR: Debt Service Coverage / Interest Cover—core serviceability ratios.
• Forced-sale value: Conservative value assumption for distressed disposals.
• LVR (LTV): Loan-to-Value ratio, by secured debt or total debt against collateral.
• NCCP: Consumer credit law—typically not triggered by genuine business-purpose loans.
• PPSR: National register of security interests over personal property.
• Standstill: Period a junior lender must wait before enforcing security.
• Tenor: Length of the facility from settlement to final maturity.
  

Implementation checklist (use this before you apply)

• Define purpose and exact dollar amounts.
• Map the exit with dates and evidence.
• Choose collateral and confirm title/ownership.
• Prepare a clean data room: financials, BAS, bank statements, ATO snapshot, aged ledgers, valuations.
• Identify any existing lenders and start the priority conversation early.
• Request two to three competing term sheets and compare all-in cost and covenants.
• Agree on reporting cadence you can actually meet.
• Lock in insurances and confirm PPSR registration details at settlement.
  

Execute this list and you’ll shave days off settlement and basis points off price.

How Secured Lending Can Help

Secured business loans aren’t “just debt.” They’re a precision tool. Use them to lower your total cost of capital, reduce execution risk, and convert plans into cash flow on a timetable you control. Start with purpose and exit, line up the right security, and present a complete file. The market will meet you halfway.

At Secured Lending, we understand the complexities of debt for businesses and the potential benefits of short term loans. Our experienced team is here to guide you through the process  and help you explore suitable financing options to address your debt effectively. 

We aim to implement our solutions as a matter of priority so that you can resume business as usual, with full control of your company.

If you or your client are in need of finance and need to speak to one of our experts, contact us on 1300 795 175 or email us at info@securedlending.com.au