Secured vs unsecured business loans

Last updated 3 November 2026 · Reviewed by 360 Asset Finance Compliance

What is a secured business loan?

With a secured loan, you offer an asset as security. If the loan isn't repaid, the lender can take and sell that asset to recover what it's owed. Common types of security for a business include:

• The asset you're buying: with equipment or vehicle finance, the ute, truck or machine usually acts as security for the finance.
• Residential property: some loans secured by residential property can be used for a business purpose, with some exclusions.
• Commercial property: premises your business or another entity owns.

Because the lender has something to fall back on, secured finance is often priced lower than unsecured finance, but the asset is at risk if you can't repay.

What is an unsecured business loan?

An unsecured business loan isn't tied to a specific asset. Businesses often use one for working capital, stock, a fit-out or other costs that don't come with an asset to secure. Because the lender takes on more risk, unsecured loans often cost more.

Unsecured doesn't always mean no one is personally responsible. Lenders commonly ask a director or business owner to act as guarantor, which means that person can be asked to repay the debt if the business can't.

What are the main differences?

• What backs the loan: secured loans are backed by an asset; unsecured loans rely on the business's financial position and any guarantor.
• What's at risk: with a secured loan, the asset can be sold if you don't repay. With an unsecured loan, a guarantor's personal assets may be at risk instead.
• Cost: unsecured finance is usually priced higher because the lender has no asset to fall back on.
• What you can use it for: asset finance is tied to the asset. Unsecured loans can often be used more broadly for business purposes.

When do businesses look at each option?

Every business is different, and this isn't a recommendation. In general terms:

• Businesses buying a vehicle or machine often look at equipment finance first, because the asset itself can act as security.
• Business owners with property sometimes consider a property-secured loan, keeping in mind the property is at risk if the business can't repay.
• Businesses that need funds for costs with no asset attached, or that don't want to offer property as security, often look at unsecured business loans.

Your accountant can help you think through the cost, the cash flow and the tax side of each option.

What does the 360 group help with?

• Unsecured business loans: 360 Asset Finance arranges these through its lender panel, subject to the lender's assessment.
• Equipment and vehicle finance: 360 Asset Finance compares lenders for cars, trucks, plant, earthmoving and other business assets.
• Property-secured and commercial property loans: 360 MMS, a non-bank lender, can lend for business purposes against residential or commercial property, with some exclusions.

360 Asset Finance is a broker, not a lender.

What will a lender want to see?

The lender will assess your application against its criteria. Requirements vary, but it helps to have:

• your ABN and business details, and how the business is structured
• identification for each applicant, director and guarantor
• evidence of business performance, such as business bank statements or financial statements
• details of your existing debts and other finance
• what the funds are for, and details of any security being offered.

What should I check before I sign?

• The total cost over the life of the loan, including fees, not just the interest rate.
• What you're putting at risk: the asset, a property or a personal guarantor's position.
• What happens if you want to repay early, and whether early repayment costs apply.

If you're signing as a guarantor, consider getting independent legal advice first.

FAQs

General information only. It doesn't take into account your objectives, financial situation or needs, and it isn't credit, tax or legal advice. Finance is provided by the lender you choose and is subject to its lending criteria; fees and charges apply. 360 Asset Finance is a trading name of Kuone Consulting Pty Ltd (ABN 75 647 329 002), Australian Credit Licence 566705.