Reliable financing is essential for business growth no matter what industry you’re in or how large your company is. However, it’s important to get the right loan for your business in order to use that financing to reach your goals. For companies ready to seize the next opportunity, secured business loans are often a wise funding solution. With a secured commercial loan, your business can access adequate funding for important initiatives, such as expanding into new locations, bringing on fresh talent, or investing in new equipment.

Once you’ve decided to apply for a secured loan, how do you know where to find the right loan product for your business? Let’s look at what you should know about secured commercial loans so you can make a well-informed decision when choosing a lender.

What are the benefits of secured loans?

As a business owner, you have a wide range of financing options to draw upon so your company always has the right amount of capital. For small to medium enterprises, debt financing options such as business overdrafts and line of credit loans are often used to meet short-term obligations and to maintain a reliable cash flow.

Another option is a secured loan. Secured commercial loans offer specific benefits that make them useful for a variety of purposes. For example, if your company wants to purchase a new plant, buy more inventory to meet seasonal demand, or needs financing to weather the ups and downs of market demand, a secured loan can give you the flexibility required to reach your next goal. They’re useful for established and early-stage companies that already have high-value assets.

Here are some of the advantages of a secured loan:

  • Lower rates. Because they’re backed by collateral, lenders are able to charge lower rates.
  • Longer loan terms. Lenders also can provide lengthier repayment terms than what you’ll find with other commercial loan products. This can translate to greater flexibility for your business.
  • Larger loan amount. If you need a large loan over $100k, you’ll probably need a secured business loan. With a high-value asset, you can get a larger loan than what you’d likely be able to get with unsecured financing.
  • Ability to access other loans. You can apply for multiple loans if you have more than one asset to use as collateral.

Are secured loans easy to get?

For companies with high-value assets, secured loans can be easy to get. When applying for an unsecured loan, lenders tend to rely on strict borrowing criteria to decide which companies to lend to. This is because unsecured loans are inherently riskier for lenders as there’s no asset backing the debt.

With secured business loans, the collateral used ensures the lender doesn’t take on as much risk. If the borrower defaults on the loan, they can take ownership over the asset to recover losses. As a result, borrowers don’t have to meet the same rigid requirements for good credit and high business turnover to qualify.

What are the differences between secured and unsecured business loans?

Secured loans require a high-value asset. Unsecured loans don’t involve any collateral. In general, because secured loans traditionally have lower rates and more flexibility, they’re a better option for most business financing needs. However, you won’t qualify if you don’t have a valuable asset to use as collateral. Also, with a secured loan, the borrower takes on more risk; if you default on the loan, you could lose the asset you pledged to secure the loan.

Unsecured loans are a good option if you’re looking for a loan that you can pay back quickly. When you can repay the loan in a short amount of time, such as within six months to one year, a higher interest rate isn’t necessarily a large concern. With a strong credit history and a robust cash flow, it won’t be difficult to qualify for unsecured commercial financing.

In terms of costs, unsecured loans will have higher interest rates. Secured business loans may have more fees, such as early repayment fees and origination fees.

How are business loans secured?

Different lenders will require different types of assets. In general, your company will need to have a high-value asset, such as property or valuable equipment, to use for collateral. For larger loans, you’ll likely need to secure the debt with real estate. At Aquamore, we offer competitive secured business loans in Australia to companies that own property as a company asset. We do consider personal guarantees on privately owned property as well.

What should I consider when choosing a secured business loan lender?

To get a business loan, you can borrow from traditional banks or a non-bank lender. Both have advantages and disadvantages. Let’s look at the pros and cons of each and what traits you should look for in a lender.

Pros and cons of applying with a bank

Banks are traditionally the go-to source for commercial debt financing. Your company may already have a bank account with a major institution, which can make the process of applying for a loan convenient. Large banks also are able to offer large commercial loans. For companies in need of several hundred thousand in financing or more, banks or established non-bank lenders are a good fit. Small alternative lenders are a better fit for small loans.

One of the most noteworthy obstacles bank lending presents is timing. It can take months to go from submitting your application to loan disbursement. The problem with this is most business opportunities are time-sensitive. When you need funds to purchase extra inventory to meet unexpected demand or to buy a business-critical asset, having to put your plan on hold to wait for your loan isn’t good for business.

Another disadvantage is the lack of flexibility. Even with a secured commercial loan, you’ll still probably have to have good credit. Also, banks cater to a huge range of customers. The business financing department of a major bank isn’t likely to offer the personalised attention and specialist expertise a boutique lender can offer. As a result, you may not end up with the best secured business loan for your company.

Pros and cons of non-bank lenders

When you look beyond the major banks, you can borrow from a non-bank lender that specialises in the unique needs of your business. For example, businesses in the agriculture sector would benefit from tailored agribusiness solutions. Small businesses will benefit from working with a lender that focuses on small business loans.

At Aquamore, you’ll find an expert team with years of experience in commercial finance for small and medium enterprises in the Sydney, Melbourne, and South East Queensland. The more expertise on your side, the more likely you’ll get the right loan for your business.

Another benefit of working with non-bank lenders is timing. Most alternative lenders can move faster than traditional banks, enabling your company to access funds swiftly and capitalise on time-sensitive opportunities.

You’ll also find more flexibility and variety. Instead of the standard strict lending criteria and limited flexibility of commercial bank lending, you can work with a lender that is well-aligned with your needs. Your company can also access debt financing even if you haven’t been trading for years or you don’t have good credit.

When looking for a lender, ask yourself the following questions. The answers will help you choose the right commercial lender for your business.

  • Does the lender offer the loan size I need for my business?
  • How comfortable am I waiting weeks, or even months for the loan to come through, or do I need a lender that can guarantee a swift, personalised process?
  • What level of expertise do the lender’s loan specialists have?
  • What repayment terms are available?
  • What fees are involved and how transparent are loan costs?
  • Where do interest rates start at?

What kind of credit score do I need for a business loan?

You don’t necessarily need excellent credit to qualify for a business loan. In fact, at Aquamore, we can offer secured loans to businesses with a poor credit rating. As a boutique lender, we take a pragmatic approach to lending. We understand that every business is unique and that not meeting certain criteria doesn’t mean a company isn’t well-equipped to handle a loan. We’re more than happy to assess the full picture to see how we can help your business. Contact us to learn more.

How do I get a secured business loan?

At Aquamore, our goal is to help everyday businesses in Australia thrive. If you’re looking for a secured business loan, call 02 9258 8888 for a free, no-obligation quote. You can use physical assets owned by your business, such as a residential or commercial property, as collateral. Because we’re a boutique lender that specialises in serving small and mid-sized enterprises in Australia, you can count on us to provide a fast timeline and a stress-free process. We offer commercial loans with a minimum loan size of $100k and a 2 to 24-month repayment term. Our interest rates for secured loans start at 7% and we charge a simple 2.2% establishment fee. Apply now to get started.