Quick answer
A GSA, or general security agreement, is a contract in which your business gives a lender a security interest over its personal property (stock, equipment, receivables, bank balances and more), usually including assets bought later. If the loan isn't repaid, the lender can enforce against those assets. The lender then registers the interest on the PPSR so that it ranks ahead of later creditors.
Key points
- A GSA is usually over 'all present and after-acquired property', so it grows as the business buys stock and equipment
- It doesn't cover land: property security needs a separate mortgage or caveat
- The agreement itself is private, but the lender's registration on the PPSR is public and searchable
- An existing GSA can block a second lender or an invoice financier unless the first lender agrees in writing
- Asking for carve-outs and a PPSR discharge at the end are the two things most owners forget
You’ve been approved, the letter of offer is in front of you, and on page three is a condition: “general security agreement over all assets of the borrower”. Nobody mentioned it on the phone. It sounds like something that matters, and it does.
A GSA is one of the most common pieces of paper in small business lending. It is also one of the least understood, because it sits in the background of a loan until the day you want a second loan, sell part of the business, or fall behind.
What is a GSA, in plain terms?
A general security agreement is a contract between your business (the “grantor”) and a lender (the “secured party”). Your business promises that, if the debt isn’t repaid, the lender may take and sell certain assets to recover what it’s owed.
The word “general” is the point. Instead of naming a single truck or a single machine, the agreement usually covers everything of a certain kind. The most common wording is all present and after-acquired property: every asset held now plus whatever is acquired afterwards.
In practice that can include:
- Stock and raw materials
- Plant, tools and vehicles
- Money owed to you by customers (receivables)
- Money in business bank accounts
- Intellectual property such as brand names, software and licences
- Contract rights, such as a lease or a supply agreement
A GSA can also be narrower. Some agreements cover only one category, such as plant and equipment, or exclude named items. What your document actually says matters far more than the label.
What doesn’t a GSA cover?
Land and buildings. Under the personal property securities law, real property isn’t “personal property”, so it is outside a GSA. When a lender wants security over a property, it uses a registered mortgage, or a caveat for faster, short-term lending, and these are recorded with the state land titles office rather than the national register. Our guide on what lenders mean by security lays out how those pieces fit together.
That’s why many business loans carry both: a GSA over the company’s assets plus a mortgage over a property, and a guarantee from the directors. For the people side of that, see business loan security and guarantees.
Why do lenders want one even on a small loan?
Three reasons, all about what happens if things go wrong.
- Recovery. If the business can’t repay, the lender has a claim over assets that might otherwise be shared among all creditors.
- Priority. Being first to register on the Personal Property Securities Register (PPSR) generally puts a lender ahead of those who register later. Priority is a large part of why lenders move quickly to register.
- Control of the next lender. An all-assets GSA with a negative pledge stops you granting the same assets as security to somebody else without permission.
A bank is often the cheapest source of money, and if you fit its criteria a GSA is a reasonable price for good terms. Lenders that take little or no property security often lean harder on a GSA instead, because it’s the main thing they have to fall back on.
How does a GSA appear on the PPSR?
The agreement itself is a private contract. What’s public is the lender’s registration on the PPSR, which records that the lender claims a security interest in your business’s assets. Anyone can search by your ABN, ACN or name and see that a registration exists, who the secured party is and a general description of the collateral. They can’t read the agreement.
Before 2012, companies’ security was recorded as “fixed” and “floating” charges on an ASIC register. The PPSR replaced that system, though the old terms still appear in older documents and in our glossary entries on a floating charge and the GSA itself. Our guide to the PPSR for small business covers how to search it and what to do with the results.
How does a GSA affect your next loan?
This is where owners get surprised. Say your bank holds an all-assets GSA over a company. A year later you want to add invoice finance, because customers are paying slowly. The invoice financier will want first claim on the receivables. But the bank’s registration already says it has a claim over them.
The usual fix is a deed of priority (or a subordination deed), where the bank agrees in writing that the invoice financier ranks first on receivables and the bank ranks first on everything else. Banks will often agree where the structure is sensible. Some won’t, and then the second facility simply can’t proceed.
A worked example: a joinery business with a $400k bank term loan secured by a GSA and a director’s property mortgage wants $120k of equipment finance for a new CNC router. The equipment financier registers a purchase money security interest in the router itself. Because it financed that specific machine, the financier can usually rank ahead of the bank on that machine if it registers on time, and it often asks the bank to acknowledge that. If nobody checked the bank’s documents, the deal can stall at the final step.
If a GSA is already blocking you, that’s a common reason an application gets stuck rather than declined outright. What to do after a decline walks through the next moves.
Tell us what you’re trying to fund and we’ll look at how your existing security affects the options. It takes about a minute.
What should you check before signing a GSA?
Read these clauses, or ask your accountant or lawyer to:
- Scope. All assets, or only listed categories? Can you exclude an asset that’s critical to another arrangement, such as leased equipment or a trade-marked brand you plan to sell?
- Negative pledge. Does it stop you from granting any other security at all, or only over the same assets?
- Dealing with assets. What can you sell in the ordinary course, and what needs written consent?
- All-monies wording. Does the GSA secure only this loan, or every amount you owe the lender now and in future? Our piece on business loan security and guarantees explains why that matters.
- Default triggers. What counts as a default? A missed payment, a breach of a financial covenant, or a loss of key insurance?
- Release. Does the lender commit to release the security and remove the registration within a set time after repayment?
The mechanics of what a lender can do if the loan defaults are set out in what happens if your business loan defaults. Reading them before signing is easier than reading them afterwards.
How do you get a GSA removed?
Repaying the loan ends the debt, but the paperwork needs a push. Ask the lender in writing to:
- Confirm the security is released.
- Discharge or amend the PPSR registration.
- Send you the confirmation.
Then run a PPSR search yourself a few weeks later and check the registration is gone. A leftover registration can trip up a refinance or the sale of the business years later. The buyer’s lawyer will search, find it, and ask you to explain.
Where does an unsecured loan fit?
Not every lender wants a GSA. Some unsecured business loans skip it, or take a lighter form of security, usually in exchange for a smaller amount and a shorter term. If the idea of an all-assets claim troubles you, that is a legitimate question to ask on day one, and it’s far easier before approval than after.
Ready to see what your business could qualify for?
Whether a GSA is already in place or about to be signed, the useful question is what it leaves you free to use. The enquiry form is a one-minute job and your credit file stays untouched. Nobody forwards your details to a string of lenders. Someone on our side reads what you’ve written and rings you. Spell out your current loans and security as precisely as you can, because that detail is what steers you to a fitting option from the start.
Frequently asked questions
What does GSA stand for in business lending?
General security agreement. It's a document in which a company, trust or other business grants a lender a security interest over its personal property to secure a debt. You'll often see it listed in a letter of offer as a condition of the loan, next to any director guarantees.
Does a GSA cover my building or land?
No. Real property such as land and buildings isn't 'personal property' under the personal property securities law, so a GSA doesn't reach it. A lender who wants your property takes a registered mortgage or lodges a caveat as well. The two are commonly paired in one loan.
Can I sell stock or equipment while a GSA is in place?
Day-to-day sales of stock are normally expected and allowed, because the lender wants you to keep trading. Selling major equipment, or anything outside the ordinary course of business, usually needs the lender's consent under the agreement. Check the clause on dealing with secured assets before you sign.
Can I have two GSAs with two lenders?
You can, but the second lender will usually want the first to agree how they rank, often through a deed of priority. Many lenders won't lend behind an all-assets GSA without it. This catches out businesses that add invoice finance or equipment finance to an existing bank loan.
How do I get a GSA released once the loan is repaid?
Ask the lender, in writing, to release the security and to remove or amend its PPSR registration. The registration doesn't disappear on its own. Search the PPSR a few weeks later and confirm it's gone before you rely on the business being unencumbered.
Does a GSA mean the lender controls my business?
Not while you keep to the loan terms. A GSA gives rights that become usable on default, such as appointing a receiver. Until then you run the business. The agreement may restrict some things, like granting other security or selling major assets without consent.