The short answer
Yes, but the market for it is small and it is priced accordingly. Nearly every lender who advertises an unsecured business loan still requires a director’s personal guarantee, and most also take security over the company’s assets. A few lenders will drop the company security on smaller facilities. Only a handful will drop the personal guarantee as well. Those are the truly unsecured loans, they cost more than secured lending, and they are only available to a clean file.
“Unsecured” describes the property, not your exposure
This is the misunderstanding that costs business owners the most. Unsecured means no mortgage is registered over real property. That is the whole of what the word promises. Two other things usually remain in place underneath it:
- Security over the company’s assets. A general security agreement, often called a GSA or an all-present-and-after-acquired-property charge, registered on the Personal Property Securities Register. It covers plant, equipment, stock and debtors.
- A director’s personal guarantee. You, as an individual rather than as the company, promise to repay the debt if the business cannot.
So a loan can be entirely accurate in calling itself unsecured while the lender holds a charge over everything the business owns and a signed promise from you personally. Nothing improper is happening. It is simply that the label answers a narrower question than most people think it does.
What a personal guarantee actually lets a lender do
If the business defaults, the lender works through the company first: the assets covered by the general security agreement. If that does not cover the shortfall, the guarantee is what lets them come to you. At that point what is in your own name is in scope. Savings, vehicles, an investment property, the family home.
The part that surprises people is buried in the guarantee document itself. Many of them contain a charging clause, under which you agree that the lender may lodge a caveat over real property you own. A caveat does not sell your house. What it does is sit on the title so that you cannot sell or refinance the property without dealing with the lender first. From there, if the debt is not resolved, the ordinary path runs through a judgment and standard recovery action, and in serious, unresolved cases through bankruptcy proceedings, which can ultimately force the sale of personal assets.
The exposure is indirect right up until it is not
On the day you sign, a guarantee is a signature and nothing appears on your property title. In a default it becomes a caveat, then a judgment, then recovery against what you personally own. That is a slower route than a mortgage gives a lender, which is part of why unsecured money is dearer, but it reaches the same assets in the end. Read the guarantee, and particularly its charging clause, before you sign. This guide is general information, not legal advice; if the amount matters, have your own solicitor read the document.
The company security most people skip past
The general security agreement gets less attention than the personal guarantee, and it has consequences of its own. It is registered on the PPSR, which makes it visible to every other lender who looks. The first lender registered ranks ahead of the next one, which is the single most common reason a second lender declines a perfectly good business. We wrote about that in why a second lender says no.
A small number of lenders will not take company security at all on smaller facilities, commonly under somewhere around $100,000 to $250,000 depending on the lender. That is worth more than it sounds. It keeps your PPSR position clear, which keeps the next lender’s door open, and it leaves your equipment and debtors unencumbered for a facility that actually needs them later. Those thresholds move constantly and are illustrative rather than a quote.
The truly unsecured loan
A genuinely unsecured facility has no property mortgage, no charge over the company’s assets, and no director’s guarantee. The lender is relying on the trading performance of the business and nothing else. Only a handful of lenders in the Australian market will write these, the limits are smaller, the terms are shorter, and the file has to be clean.
What a clean file means here
- Real trading history. Two years and up, not the six months that gets you into standard unsecured lending.
- Consistent revenue. Steady deposits across twelve months of bank statements, not one strong month carrying four quiet ones.
- Clean account conduct. No dishonoured direct debits, and an average daily balance that does not spend the month in the red.
- Your ATO position resolved. Either nothing owing, or a formal arrangement you are demonstrably meeting.
- No stack of existing lenders. Several daily debits already hitting the account will end this conversation quickly.
- A clean director credit file. Without a guarantee the lender has no recourse to you, so they are far less forgiving of defaults and judgments than they would otherwise be.
What it costs
Removing the lender’s recourse does not remove their risk, it just repositions it into the rate. As a rough shape of the market, a facility secured by property sits at the cheap end, standard unsecured lending with a guarantee sits well above it, and guarantee-free lending sits above that again, with lower limits and shorter terms. These are indicative ranges observed across our panel, not offers, and your own file moves them a long way.
Which means the honest question is not “can I avoid a guarantee”. It is “what is avoiding it worth to me, in dollars, on this particular deal”.
When paying that premium makes sense
- You are about to buy or refinance property. A caveat, or a guarantee you have to disclose, can complicate a home loan application at exactly the wrong moment.
- Not every director will sign. With multiple directors or outside shareholders, one person’s unwillingness to guarantee can be the whole constraint.
- Your shareholder or investor agreement prohibits it. More common than people expect once outside capital is involved.
- The amount is small and the term is short. A premium on $80,000 over nine months is a manageable number. The same premium on $800,000 over three years usually is not.
And the case against, which we will make just as plainly: if you were always going to stand behind the business anyway, paying a significant premium to avoid a document that says so can be an expensive way to buy a feeling. Often the better answer is a normal facility, properly understood, with the guarantee negotiated down rather than avoided.
How we approach it
We ask two questions before the file goes anywhere: are you prepared to sign a personal guarantee, and is the company prepared to give security over its assets. The answers decide which part of the panel sees the deal, because approaching a lender whose terms you will not accept wastes a week and leaves a footprint on your file for nothing.
Then we tell you what each option costs side by side, including the premium for going guarantee-free, so the decision is yours with the numbers in front of you rather than discovered at signing. Where a guarantee is unavoidable, we look at whether it can be capped at an amount, or limited to one director, before you sign anything.