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Defining the Two Types
- Secured business loan: Backed by collateral such as business equipment, property, vehicles or inventory. Failure to repay may lead to seizure of the assets.
- Unsecured business loan: No collateral is required. Approval is based on creditworthiness, trading history and cash flow performance.
When Secured Loans May Be a Good Fit
- Large funding needs, such as buying plant, machinery or property.
- Owners comfortable pledging assets in exchange for lower interest and longer terms.
- Weaker credit profile, where collateral helps secure lender approval.
When Unsecured Loans Might Be Preferable
- Rapid access to funds, useful for payroll, working capital, ordering inventory, where speed matters.
- Avoiding collateral risk, suitable for businesses without major assets or unwilling to risk them.
- Strong financials, where business performance supports loan approval without collateral.
Deciding Factors for Perth Businesses
- How much you need to borrow
- High amounts = secured loan options
- Small short-term amounts = unsecured may suffice
- How quickly you need funds
- Urgent = go unsecured
- Can wait for valuations = secured
- Your business assets
- No assets? Unsecured only
- Have equipment/property? Secured available
- Your appetite for risk
- Collateral means higher stakes
- Unsecured protects assets but costs more
A Broker’s Role: Guidance You Can Trust
By working with a local Perth finance broker, you tap into tailored support: comparing rate profiles, understanding legal implications (eg. PPSR registration, personal guarantees), and selecting the right lender for your structure.
Conclusion
✔ For large funding and lower interest: consider secured loans.
✔ For fast, asset free access: consider unsecured loans.
The right choice depends on your stage, collateral, risk appetite and a broker can help match funding to business goals.
