Compare secured business loans
When looking to access financing for your business, one of the most effective ways of increasing your borrowing power is by supplying an asset as security for your loan. Read about how secured business loans work and the best ways to compare offers from all around Australia right here with Savvy today.
|Lumi Unsecured Business Loan|
Boost your business with fast hassle-free funding from Lumi. Apply online in five minutes without harming your credit score and get funds in as quickly as 24 hours. For a limited time: Business Loans with No Repayments for the first 6 weeks. T&C apply.More details
|Lumi Lux Rate Reducing Business Loan|
Lumi Lux™ is an innovative rate-reducing business loan that rewards customers with good repayment histories and no contractual breaches throughout their loan term by dropping interest rates by 25 basis points (0.25%) every six monthsMore details
|Valiant Finance Business Loan Broker|
Valiant is Australia’s leading business loan broker with a network of over 80+ lenders. Apply for a business loan between $5,000 and $1 million and get approved in as little as 24 hours.More details
|ebroker Unsecured & Secured Business Loans|
Compare, find and match fast to over 80 bank and non-bank lenders accessing much needed working capital from a unsecured business loan.More details
Disclaimer: Savvy is not advising or recommending any particular product to you. We provide general information on products for the purposes of comparison, but your personal situation or goals are not considered here. Although we try to make our comparisons as thorough as possible, we do not have information on all products on the market on our site.
You should always consult a given offer's PDS or further documentation in the process of deciding on which loan to choose, as well as seeking independent, professional advice. If you decide to apply with one of the lenders listed above via our website, you will not be dealing with Savvy; any applications or enquiries will be conducted directly with the lender offering that product.
The features and benefits of secured business loans
By opting for secured financing, you’ll be able to access larger loans from $100,000 up to $500,000, making them useful for more substantial investments you may not otherwise be able to afford.
Because of the asset you’re supplying as security, your loan will be considered a lesser risk to the lender and thus lead to a lower interest rate than an unsecured loan.
You get to decide on the loan term that suits your needs, with periods up to three years enabling you to choose a length of time which facilitates manageable repayments.
If you’re applying for a secured loan under $250,000, you can access pre-approval without needing a credit check to take place, giving you an indication of the loan amount you might receive.
There are a range of different assets that can be used as security for your loan, with the most common being property and vehicles, equipment and balance sheets sometimes being accepted.
There’s essentially no limit to the ways that you can utilise your funds, with the purchase of equipment, addition to cashflow, covering employee wages and expanding your premises all options.
Because our lenders operate 100% online, you can apply at any time of day or night and be safe in the knowledge that the funds you need will be waiting for you when your lender assesses your application.
Each applicant is different, so you’ll receive an interest rate offer on your business loan that’s tailored to your business’ situation, rather than a one-size-fits-all approach.
Secured business loans explained
What are secured business loans?
A secured business loan is a type of business loan where the business has offered some security (also called collateral) on the loan. Collateral is a term for an asset, owned by the business, which has been made available to the bank as insurance against risk. The idea is that if something goes wrong with the loan (such as the business hitting financial difficulties and being unable to make loan payments) and the bank stands to lose money, it can sell the asset to recoup any loss. This very rarely happens of course; not only will this never be a threat should you be able to promptly and regularly make repayments, lenders would much rather help you get back on track with repayments than sell assets anyway.
Many different assets can be used as collateral. It’s very common for a property to be used (often the property from which the business operates), but vehicles and significant pieces of business equipment can also be an option. The main thing is that it needs to be valuable – the value of the asset if it was sold needs to make up a significant portion, if not the entirety, of the loan amount.
Secured loans can be much larger and more long-term than other types of business finance, as there’s a good backup plan in place if anything goes wrong for the lender. Depending on the business, the lender and the asset, some lenders can offer secured loans of well over $10,000,000 to paid off over the course of up to ten years. However, it’s important to compare your options to ensure you apply for the best loan available to you and your business.
What are the advantages of secured loans?
There are several factors that make secured loans an attractive option for a business finance. First and foremost, a secured loan will generally offer the best interest rates you can get on a business loan in Australia. Offering collateral decreases the risk for the lender and improves their confidence, which means lenders are able to offer much better terms and cheaper overall loans.
Secured loans can also involve much larger amounts than other types of loan. The exact amount offered will always depend on your business and the lender in question, but while most lenders have a maximum amount for unsecured loans around $200,000 to $300,000, lenders will offer secured loans with considerably higher amounts. A small business shouldn’t count on getting a secured loan that large, of course, but you’ll still be able to borrow much more with collateral than without.
The loan term can also be a lot longer – sometimes in excess of ten years. That gives you the chance to take advantage of the low interest rate by paying a large amount off over a long time. This makes secured loans a good choice to finance large scale business projects such as a significant upgrade of your facilities, or opening an entirely new branch.
Top tips for what to consider when choosing a secured loan
Not every business has a significant asset to offer, which means many smaller businesses might not have the option of a secured loan, instead having to choose an unsecured small business loan. While it’s technically a possibility to offer a private residence as collateral on a business loan, many operators are uncomfortable with putting their home or personal property at risk.
Depending on the lender, secured loans can be quite slow to get approved; some larger lenders can take six to eight weeks to process a secured loan application. This is not universal though, and some lenders – most notably online lenders – can offer faster turnaround times, as quick as inside a matter of days.
In an ideal world, secured business loans would always get repaid without a hitch, but the reality is that offering an asset as collateral comes with a very small risk of losing the asset. This is always a last resort for the lender though – they’re not going to sell your property after the first missed payment. It’s very rare that collateral is actually sold off.
A secured loan is often a long-term investment. While it can offer very useful finances, you need to think through the impact of making repayments on a loan for many years to come. The upside is that with the lower interest rates offered on a secured loan, that can sometimes be a better prospect than a number of shorter-term business loans.
When an asset becomes collateral, you don’t have complete control of it anymore. While you still get to keep it on your premises and use it for your business, you can’t do much to change it, as that might change its value to the lender. You also can’t sell or replace it. That limits your options for switching or renovating your business premises, and upgrading equipment or vehicles offered as collateral.