Quick answer
An unsecured business line of credit is sized on turnover and bank statements, approved quickly and usually backed by a director guarantee, but limits are modest. A secured line of credit is backed by property, so the limit can be much larger and the cost per dollar lower, but setup takes longer and the mortgage stays on the title for as long as the facility is open, even when nothing is drawn.
Key points
- Unsecured lines are sized on revenue; secured lines are sized on property equity and serviceability
- A secured facility's mortgage stays registered while the line is open, even at a zero balance
- Some unsecured lines turn each drawing into a short fixed-term repayment rather than a true revolving balance
- Unsecured lines almost always carry a director guarantee and often a PPSR registration over business assets
- The RBA reports unsecured lending has stayed under 5% of SME credit, which is why bigger limits usually need property
- Unsecured limits
- Sized on turnover; typically within $5k to $500k
- Secured limits
- Sized on equity; property-secured from $20k to $5m
- Unsecured setup
- Often a day or two
- Secured setup
- Usually one to a few weeks (valuation and mortgage)
Three questions settle most of this decision before you look at a single quote. How big does the limit need to be? How quickly do you need it? And are you comfortable with a mortgage sitting on a property title for as long as the facility stays open? Answer those honestly and you’ll usually know which way to go.
The comparison at a glance
| Unsecured line | Secured line | |
|---|---|---|
| Limit sized on | Monthly turnover, deposit pattern, trading time | Property equity, then your ability to service the limit |
| Typical limit | Tens of thousands to the low hundreds of thousands | Hundreds of thousands to millions |
| Approval evidence | Bank statements or accounting software link | Valuation, title search, financials or statements |
| Time to set up | Often a day or two | One to a few weeks for a registered mortgage |
| What backs it | Director guarantee; often a PPSR registration over business assets | Mortgage over real estate, usually plus guarantees |
| How drawings are repaid | Some lenders require each drawing repaid over a fixed number of weeks or months | Usually interest on the balance, with principal repaid as you choose within the limit |
| Ongoing cost per dollar | Higher | Lower |
| Setup costs | Low | Valuation, legal and registration costs |
| Credit history | Weighs heavily | Weighs less when equity is strong |
Why unsecured lines stay small
Look at the RBA’s figures from late 2025. More lenders now offer credit without property behind it, yet that unsecured slice has hovered under 5% of all SME lending. Meanwhile a typical new loan backed by a house is roughly 4.5 times bigger than one backed by vehicles, equipment or other assets. The pattern is clear enough: without a property to fall back on, lenders keep limits tight.
Unsecured line providers work out your limit from the cash moving through your account. Steady deposits, few dishonours and a healthy average balance push it up. Lumpy months, existing short-term loans and overdrawn days push it down. Several also ask the company to sign a general security agreement and then record it on the PPSR, which isn’t a mortgage but does rank ahead of later creditors.
Revolving or not quite?
A detail that catches people: not every “line of credit” revolves the way a bank overdraft does. With some unsecured providers, each drawdown becomes its own small fixed-term repayment, debited weekly over a set period. Repaying it frees the limit again, but you can’t simply leave a balance sitting and pay interest only. That suits a business with steady takings. It’s awkward for one that waits 60 days for a single large payment.
A secured line is more often genuinely revolving: interest on whatever is drawn, with freedom to pay down and redraw within the limit. Ask the lender to explain, in writing, exactly how a $20k drawing would be repaid.
The mortgage that outlives the balance
With a secured line, the lender registers a mortgage (or holds a caveat) over the property for the life of the facility. Pay the line back to zero and the mortgage is still there. That has three practical knock-on effects:
- Selling or refinancing the property means closing the line or providing replacement security.
- Your first-mortgage lender may need to consent to a second-ranking mortgage, depending on its contract.
- Other lenders will see the full limit, not the drawn balance, when they assess your position.
That doesn’t make a secured line a bad idea. It’s a reason to size the limit carefully and know your exit before signing.
When does the unsecured line win?
- No property, or none you want involved. Tenants and owners who won’t use the family home. Our business loans without property page lays out the field.
- You need it this week. Approval from statements can be very fast.
- The need is modest. Topping up stock, smoothing wages, covering a slow month.
- Takings are steady. Weekly repayment of each drawing sits comfortably against regular deposits.
- You want to test the habit. A small unsecured line shows whether you really use a revolving facility before committing property to one.
When does the secured line win?
- The limit needs to be large. Seasonal stock cycles, big contracts or debtor books that run into six figures.
- Customers pay slowly. A true revolving balance can sit drawn until a large invoice is paid.
- Credit has a blemish. Equity carries more of the weight in the assessment.
- You’ll hold it for years. Lower ongoing cost per dollar adds up over a long-standing facility.
- You’re replacing several small facilities. One secured line can consolidate overlapping unsecured lines.
Our page on the secured line of credit goes deeper on reviews, limits and costs. Before then, the property equity calculator shows roughly how much room your property has.
Not sure your equity or turnover would stretch far enough? Ask us with a quick enquiry; it won’t appear as a credit check.
Worked example: a wholesaler with a summer peak
Illustrative only. A homewares wholesaler turns over about $2.2m. Every August it pays importers around $300k for Christmas stock, and retailers settle between November and January.
- An unsecured line sized on turnover offers $90k, with each drawing repaid weekly over six months. It covers part of the order, but weekly debits start in September, months before the money comes back.
- A secured line of $350k over the owners’ warehouse takes three weeks to set up and costs a valuation and legal fees. Drawn in August and cleared in January, the business pays interest only on what’s out, for the months it’s out.
Here the property-backed facility matches how cash actually moves. A café wanting $30k to cover a quiet winter would find the opposite: the unsecured line is quicker, cheaper to set up and plenty.
Checklist before you choose
- What’s the peak balance you’ll actually draw, and for how long?
- Does each drawing revolve freely, or repay over a fixed term?
- Is there a line fee on the full limit?
- What guarantees and PPSR registrations come with the unsecured option?
- For the secured option, does your first lender need to consent?
- Will you want to sell or refinance the property while the line is open?
- What does it cost, all in, over a year of realistic use? The line of credit vs term loan comparison helps if neither line fits.
Get the limit right the first time
A line of credit only helps if its size and repayment style match the way money moves through your business. Working that out with you is what our team does. The enquiry form is roughly a sixty-second job and your credit score stays untouched by it. We keep your enquiry to ourselves; it isn’t broadcast to dozens of lenders. An experienced person reviews your turnover, your property position and the timing of your cash gap, and phones you with options. Please describe things as they really are, including any existing facilities, so the line we suggest first is the one that suits.
Frequently asked questions
How much can I get on an unsecured business line of credit?
Lenders mostly size unsecured lines from your monthly turnover, the consistency of your deposits and how long you've traded. Smaller businesses tend to receive limits in the tens of thousands, while established businesses with strong statements can reach into the low hundreds of thousands. Beyond that, property is usually needed.
Does a secured line of credit stop me selling or refinancing my property?
It doesn't stop you, but the lender's mortgage has to be discharged or replaced first. That usually means repaying the balance and closing the line, or arranging new security. Build that into any sale or refinance timeline.
Is an unsecured line of credit really unsecured?
No specific property is mortgaged, but directors usually sign a personal guarantee and many lenders register a security interest over business assets on the PPSR. You're still personally exposed if the business can't pay.
Which is cheaper?
Per dollar drawn, a secured line usually costs less because the lender's risk is lower. A secured line also carries setup costs such as valuation and legal fees, so for a small or short-lived need an unsecured line can cost fewer dollars overall.
Can I convert an unsecured line into a secured one later?
Usually by refinancing, not by converting. Owners often start with an unsecured line, then move to a larger property-secured facility once they need more headroom or want lower ongoing costs.
Can I get a line of credit with bad credit?
An unsecured line is hard with recent defaults because the lender relies heavily on credit history. A property-secured line puts more weight on equity and the plan to repay, so it's often the more realistic option after credit problems.