Finance

Unsecured vs Secured Business Loans: Which One Suits Your Business?

  •  
5 min
28/7/2025
Nathan Hanna
Director

As a Perth entrepreneur, choosing the right business loan can positively impact your operations, from cash flow smoothing to expansion and equipment purchases. But should you opt for unsecured or secured funding?

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

  1. How much you need to borrow
    • High amounts = secured loan options
    • Small short-term amounts = unsecured may suffice
  2. How quickly you need funds
    • Urgent = go unsecured
    • Can wait for valuations = secured
  3. Your business assets
    • No assets? Unsecured only
    • Have equipment/property? Secured available
  4. 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.

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Nathan Hanna
Director
Nathan has 10 years experience as a finance broker, helping Australians find the right loan. Nathan will work with you to get your next asset or personal finance.

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