Quick answer
A secured creditor is a lender or supplier owed money that also holds a security interest over some or all of the debtor's property, such as a registered mortgage over land or a PPSR registration over equipment, stock or receivables. If the debt isn't paid, it can look to those assets for repayment ahead of unsecured creditors. That priority is why secured lenders can usually lend more and charge less.
Key points
- Holds a security interest: a mortgage, a caveat-backed interest or a PPSR registration
- Paid from the secured assets before unsecured creditors see anything from them
- Employee entitlements can rank ahead of a lender's claim over circulating assets
- A company's security interest registered late on the PPSR can be lost if the company fails
When you sign a loan that takes security, you turn that lender into a secured creditor. It’s worth understanding what that gives them, because it shapes how much you can borrow, what happens if trade turns bad, and whether the next lender will touch you.
What makes a creditor “secured”?
ASIC’s insolvency glossary describes a secured creditor as one that holds a security interest in some or all of a company’s property. In practice that interest is created and made public in one of two places:
| Asset | How the security is taken | Where it’s recorded |
|---|---|---|
| Land and buildings | Registered mortgage, or a caveat protecting a loan agreement | State land titles registry |
| Equipment, vehicles, stock, receivables | Security agreement, including a general security agreement | The PPSR |
A creditor without either is unsecured, no matter how large the debt. Our unsecured creditor page covers that side.
Where does a secured creditor rank?
Security gives a creditor first call on the specific assets it covers. If a company goes into liquidation, the secured creditor can appoint a receiver to sell those assets, or let the liquidator deal with them and account for the proceeds. Anything it can’t recover becomes a shortfall, and ASIC notes it can then vote and claim for that shortfall as an unsecured creditor.
Two details change the simple “secured goes first” picture:
- Circulating assets. Security over stock, receivables and cash (once called a floating charge, now a circulating security interest) sits behind certain employee entitlements. Wages and super owed to staff can be paid out of those assets before the lender is.
- Late registration. If a company grants a security interest over personal property and the creditor doesn’t register it on the PPSR within 20 business days, the interest can vest in the company if it goes into administration or liquidation within six months. The lender is then treated as unsecured. This is a common, painful lesson for equipment suppliers relying on retention of title.
Neither rule affects a mortgage over land.
Why it matters when you borrow
Lenders price risk, and security lowers it. That’s why a secured business loan over property is usually cheaper in dollar terms and larger than an unsecured one. Banks are often the lowest-cost secured creditors of all, so if you meet their criteria, take their offer seriously.
There’s a second effect. Each new lender searches the PPSR and land titles before it lends. If an existing financier already holds a general security agreement over everything, a newcomer will rank behind it and may need a priority or subordination deed.
Weighing up which assets to offer as security? Ask us what they could support.
Example: three creditors, one warehouse business
A Brisbane wholesale distributor owes:
- A bank: $600,000 under a first mortgage over its warehouse
- An equipment financier: $90,000, registered on the PPSR over two forklifts and racking
- An invoice financier: $140,000, with a general security agreement registered over receivables
All three are secured creditors, but each over different assets. If the business sold up, the bank is repaid from the warehouse, the equipment financier from the forklifts and racking, and the invoice financier from debtors as they pay. Trade suppliers, owed $75,000 with no registrations, stand behind all of them for whatever’s left.
Related terms
- Creditor: anyone the business owes money to.
- Security interest: the legal right a secured creditor holds.
- First mortgage: the top-ranking security over land.
- Senior debt: debt that ranks ahead of other borrowings.
Have security and need a lender who values it?
Property or business assets can open doors that unsecured lending can’t, even after a bank decline. Tell us what you have, and we’ll work out what it could realistically support.
The enquiry is brief, under a minute for most people, and it isn’t a credit application, so your file isn’t checked. We don’t circulate it to dozens of funders. A lending specialist reviews your details and contacts you directly. Be precise about existing loans and who holds security over what; that’s the information that decides the best structure.
Frequently asked questions
How do I find out who my secured creditors are?
Search the PPSR against your company's ACN or your own details, and order title searches for any property you own. Between them they show registered security interests over personal property and mortgages or caveats over land.
Can a secured creditor sell my assets without going to court?
Often the security agreement gives the lender the right to take possession and sell after a default and the required notices. For land, mortgagee sale procedures under state law apply. The exact steps depend on the agreement and the type of asset.
Is a supplier with retention of title a secured creditor?
It can be. A retention of title clause usually counts as a security interest under the PPSA, but the supplier generally needs to have registered it on the PPSR to rely on it if the customer becomes insolvent.
Does a secured creditor get paid in full in a liquidation?
Only up to what its secured assets realise, after any claims that rank ahead of it on those assets. If there's a shortfall, it can claim that balance as an unsecured creditor alongside everyone else.
Why would a lender want a general security agreement?
A general security agreement covers all of a company's present and future personal property, so the lender becomes a secured creditor over equipment, stock, receivables and more in one document. It's common with banks and invoice financiers.