Quick answer
Security is the lender's right to claim assets if a loan is not repaid. In business lending it can be a general security agreement over all business assets registered on the PPSR, a charge over a specific vehicle or machine, a caveat on a property title, or a registered mortgage. Each gives the lender different rights. Check exactly what is covered, how it is registered and when it will be released.
Key points
- A GSA can cover all present and future business assets.
- Personal property security is registered on the PPSR.
- Property security uses caveats or registered mortgages on the title.
- Security affects your ability to borrow elsewhere, so negotiate its scope.
Checklist
- Which assets are covered
- Whether future assets are included
- Where it is registered (PPSR or land title)
- Ranking against other lenders
- Conditions for release
- Restrictions on selling or using assets
“Security” sounds like a technicality, but it answers the most practical question in any loan: what can the lender take if things go wrong? In business lending, the answer ranges from a single delivery van to every asset the business owns now or in the future, or a home. Understanding the type and scope of security in an offer is one of the most important parts of reviewing it.
The main forms of security
| Security | Covers | Registered on |
|---|---|---|
| General security agreement (GSA) | All or most business personal property, often including future assets | PPSR |
| Specific security agreement | One named asset, such as a vehicle or machine | PPSR |
| Caveat | An interest claimed in land | State land title register |
| Registered mortgage | A formal charge over land | State land title register |
| Guarantee secured by property | A guarantor’s property backing their promise | Land title register |
General security agreements in plain English
A GSA gives the lender a security interest over the business’s personal property: equipment, vehicles, stock, receivables, cash at bank and sometimes intellectual property. Many GSAs include “after-acquired property”, meaning assets the business buys later are automatically covered. The lender registers its interest on the Personal Property Securities Register, and that registration determines its priority against other secured parties.
GSAs are common in both secured and unsecured business lending. They can be reasonable, but they have consequences: other lenders may be reluctant to lend against assets already covered, and you may need the GSA holder’s consent to sell or refinance certain assets.
Specific asset security
Equipment and vehicle finance usually takes security over the specific asset only. That is narrower and easier to live with than a GSA. If an unsecured lender asks for a GSA, it is worth asking whether security over specific assets, or none at all, would be acceptable.
Property security: caveats and mortgages
For property-secured loans, the lender’s interest is recorded on the land title. A caveat warns others of the lender’s claimed interest and blocks dealings with the property. A registered mortgage gives the lender formal rights, including power of sale on default. Each state runs its own land registry; the NSW Registrar General’s guidelines include a clear explanation of what a caveat is. Our guide to caveats versus registered mortgages compares them.
Ranking and priority
When more than one lender holds security over the same assets, ranking decides who is paid first. Earlier PPSR registrations generally rank ahead of later ones, subject to special rules for purchase-money security interests such as equipment finance. On land, a first mortgage ranks ahead of a second. Lenders check rankings carefully, and you should know where each lender sits.
Restrictions that come with security
Security documents often restrict what you can do with the assets: selling them, moving them, granting further security or changing the business structure without consent. Breaching these restrictions can be a default. Read the undertakings section of the security agreement and list what needs consent.
What to negotiate
- Scope. Limit a GSA to specific assets, or exclude assets you plan to finance separately.
- Future assets. Ask whether after-acquired property can be excluded.
- Priority arrangements. If you have an existing equipment lender, ask the new lender to agree on priorities.
- Release. Agree that security will be released promptly once the loan is repaid.
- Proportionality. Security should match the size and risk of the loan.
Check your own registrations
Search the PPSR using your ABN or ACN to see what is already registered against the business. Old registrations from repaid loans sometimes linger and can complicate new borrowing. If you find one, ask the secured party to remove it.
When the loan ends
When a loan is repaid, the lender should remove its PPSR registration, withdraw any caveat or discharge any mortgage. Ask for written confirmation and check the PPSR or title yourself a few weeks later. Lingering registrations can block future finance.
An illustrative example
A made-up landscaping company is offered an unsecured loan with a GSA covering all present and future assets. The owner plans to finance two new trucks next year. She asks the lender to exclude vehicles from the GSA. The lender agrees, and next year the truck financier can take first-ranking security over the trucks without needing the first lender’s consent.
Security and your other lenders
Before you sign new security, list the finance you already have and what each lender holds. An existing equipment lender may have specific security over machines; a bank may hold a GSA from an old overdraft; a property lender may have a mortgage. Adding a new GSA on top can create conflicts, require consents or breach covenants in existing agreements. Telling the new lender about existing arrangements upfront allows them to structure security that works with what is already there, rather than discovering a clash just before settlement.
Security in a business sale
If you sell the business or its assets, secured lenders usually need to be repaid or to consent before assets can be transferred free of their interests. Buyers will search the PPSR and title registers. Planning releases early avoids delays at settlement.
Want to understand the security in an offer?
If you are unsure what an offer’s security means for your business, make one enquiry. There is no credit check when you first enquire, a real person reviews it and your details go to one lending partner rather than a list. Mention any existing PPSR registrations or property loans in your enquiry so options can take them into account.
Frequently asked questions
What is a general security agreement?
A GSA gives a lender a security interest over a business's personal property, which can include equipment, vehicles, stock, receivables and intellectual property, often including assets acquired later. It is registered on the Personal Property Securities Register.
Does a GSA cover my house?
A GSA over a business usually covers personal property, not land. Land and buildings need a mortgage or caveat. However, a guarantee you give may be secured separately over your property.
How do I check what is registered against my business?
Search the PPSR using your ABN or ACN. It shows registrations by secured parties against the business's personal property.
Can I have security with more than one lender?
Yes, but rankings matter. An earlier GSA may take priority over later security, and some lenders require consent before you grant more security.
What happens to security when the loan is repaid?
The lender should remove PPSR registrations, withdraw caveats or discharge mortgages. Ask for confirmation, and check the PPSR or title afterwards.
Sources and further reading
We are an information site, so we do not rank lenders, publish interest rates or accept payment to feature a product. Every page is written and checked by our editorial team against official sources. Read our editorial policy and how we are funded.
