Your browser is out of date. From Thu 28 April 2022, the Great Southern Bank website will not support your current browser, and you may have a degraded experience or be unable to connect. Update your browser to secure your online experience.

Search
Close

What’s the difference between secured and unsecured business loans?

If you’re looking for finance to start or grow your business, a quick search reveals a mind-boggling list of loans on offer.

To save you some time, here’s a tip: the simplest loan is often the best.

The unimaginatively named business loan (sometimes called a “term loan”) works a lot like a home loan. You borrow a certain amount and make regular repayments over an agreed term.

But, unlike a home loan, you may have the option to choose between a business loan that’s secured or unsecured.

So, what’s the difference?

What is a secured business loan?

When you take out a secured business loan, the bank asks for an asset that you own to use as security.

A security is collateral, a kind of guarantee you’re giving to say that you’ll pay back the loan.

This security might take the form of a commercial or residential property, business equipment or money owed to you by your customers (accounts receivable).

Choosing a secured business loan comes with advantages. You can borrow a larger amount at a lower interest rate to help drive your business growth.

However, approval times may be longer if the bank needs to value your asset. And, if you’re unable to repay your business loan, your bank may sell your asset to recoup the debt.

What is an unsecured business loan?

Just like it says on the label, an unsecured business loan doesn’t use your asset as security.

Generally speaking, your bank needs to see that you’ll be able to repay the loan. You can show this by proving that your business has enough cashflow to cover your repayments and other commitments. A credit history free of defaults also helps.

Unsecured business loans can be a great choice for smaller loan amounts, but because your bank won’t take security, interest rates for unsecured business loans are higher in comparison to secured loans.

You can apply for an unsecured business loan online or in the Business+ app. There’s no paperwork involved so your application is finished in minutes, not hours or days.

Do your research

Before you apply for a small business loan, take some time to review what your business needs, how you’ll use the funds to help your business succeed, how much it will cost and what you can afford to borrow.

And while you wear many hats as a small business owner, you don’t need to be a finance expert to find the right loan. A great place to start your research is Great Southern Bank’s Business+ Unsecured Loan specifically designed for small businesses.

You can borrow up to $50,000 without security. And you can rest easy knowing your repayments won’t change over the life of the loan. Get started online or download the Business+ app.

For everything you need to know about running a successful business, visit our online Business Hub.

More from the small business banking hub

Everything you need to know about small business banking.

Business Overdraft vs. Business Loans

Business loans and overdrafts are great ways to support your cashflow or growth of your small business. This article helps you decide what’s right for you.

Read more
How to Get a Business Loan

Whether it’s growing your business or boosting your cashflow, there are a few things to know about business financing. Learn more about business loans.

Read more
Can you Afford to Grow Your Business?

When your business is booming, it can be tempting to dream about business growth. But is your business ready to grow? Find out more.

Read more
100% DIGITAL

Your pocket-sized business partner

For too long, smaller small business owners have had their unique business banking needs overlooked.

Our Business+ app is built for you.

Whether you’re striving for global domination, or you’re blissfully content as a sole trader, the Business+ app makes small business banking easy.

Download the app
Important Information

Great Southern Bank, a business name of Credit Union Australia Ltd ABN 44 087 650 959, AFSL 238317. Conditions, fees and charges apply. This is general information and does not consider your objectives, financial situation or needs. Consider the appropriateness of the information, including the Business Banking Terms & Conditions (T&Cs), before acting on it. Lending criteria, limits, conditions, and fees apply. Applications are subject to credit approval. A Business+ Unsecured Overdraft and Business+ Unsecured Loan is only available to approved applicants for business purposes. Lending criteria, limits, conditions, and fees apply. Applications are subject to credit approval. An early payout cost may apply if a Business+ Unsecured Loan is terminated during the fixed rate period.