Unsecured vs Secured Business Loans: What’s the Difference?
Last updated: November 2024
Business Finance Insights by Casey Asset Finance — helping Australian Small Business Owners access smarter funding.
When you’re comparing business finance options, you’ll quickly come across two main types — secured and unsecured business loans.
Understanding how they differ can save you time, protect your assets, and help you choose the loan that’s right for your business.
At Casey Asset Finance, we specialise in both types of funding. Here’s everything you need to know — in plain English.
What is a secured business loan?
A secured business loan requires you to provide an asset as collateral. This can include:
Property (residential or commercial)
Vehicles or machinery
Stock, invoices, or other tangible assets
If the borrower can’t meet repayments, the lender can legally claim or sell that asset to recover their funds.
Why businesses choose secured loans:
Lower interest rates
Larger loan amounts (often $100K to $5M or more)
Longer repayment terms
Secured loans are ideal for established businesses with assets or those purchasing equipment that can serve as security.
What is an unsecured business loan?
An unsecured business loan doesn’t require any property or equipment as security.
Instead, lenders assess your:
Business cash flow
Trading history
Bank statements
Credit profile
Approvals are usually much faster because there’s no need for asset valuations or registrations.
Why businesses choose unsecured loans:
No property risk
Fast approvals, often within 24 hours
Flexible use of funds
Low-doc and no-doc options available
Unsecured loans are perfect for small businesses and sole traders who have strong cash flow but don’t want to use their assets as collateral.
The main differences explained
The easiest way to think about it is this:
Secured loans are slower but cheaper.
Unsecured loans are faster but slightly higher in cost.
Secured loans require property or other assets as security. Unsecured loans don’t.
Secured loans take longer to process due to valuations and documentation, while unsecured loans can be approved in under 24 hours.
If your business has assets and you need a large loan amount, secured finance may be the better choice.
If speed and flexibility are more important than using property as security, an unsecured loan may suit you best.
Which option is right for you?
It depends on your goals, risk comfort, and how quickly you need funds.
You might prefer a secured loan if:
You’re applying for a larger loan amount.
You have property or business assets available as collateral.
You prefer a lower interest rate and can wait longer for approval.
You might prefer an unsecured loan if:
You need funds urgently.
You don’t want to use your home or business assets as security.
You’re covering short-term expenses like stock, wages, or ATO obligations.
💡 Tip: Many Casey Asset Finance clients start with an unsecured business loan to cover immediate needs. You then have the option of refinancing into a secured facility once their business grows, and you’re in a stronger position.
Real-world examples
Example 1: Secured business loan
A manufacturing company buys $250K worth of new machinery. The equipment itself is used as security. The business receives a lower rate, but the lender holds title to the asset until the loan is repaid.
Example 2: Unsecured business loan
A café owner needs $60K for renovations and staff ahead of summer. No collateral is required. The business is approved within 24 hours, and repayments are structured around weekly cash flow.
How we help you choose the right option
At Casey Asset Finance, we compare over 40 Australian lenders to find the best loan structure for your situation.
We’ll help you:
Understand your options in simple terms
Match the right lender to your cash flow
Avoid unnecessary applications that can harm your credit score
Frequently Asked Questions
Can I convert an unsecured loan into a secured one later?
Yes. Many lenders allow refinancing or top-ups once your business grows or you acquire assets.
Are unsecured loans more expensive?
Generally yes, but they’re faster and don’t risk your property — making them ideal for short-term or emergency funding. Some lenders also allow you to pay out early with no break fees - reach out to learn more.
What if I have bad credit?
Specialist lenders offer unsecured loans for clients with poor credit. A pre-assessment will confirm your eligibility without impacting your credit score.
Want to know your best loan option?
Get started in 30 seconds — it’s 100% free and won’t affect your credit score.
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About the author
Michael Pajar is the Director of Casey Asset Finance, a Melbourne-based business finance brokerage helping Australian SMEs secure funding through fast, transparent, and responsible lending solutions.
Call Michael on - 0450 622 115
Or email me at - michael@caseyassetfinance.com.au
