Contents
Loans are quite common between businesses — whether that be with a bank or with another business.
There are two main types of business loans: secured and unsecured. In 2025, secured loans remain a popular choice as they provide enhanced protection for lenders.
Secured loans are considered very safe for lenders because they involve a security interest over the debt. This means that if the borrower defaults, the lender has legal rights over the collateral provided.
To effect that security in writing, you’ll need a General Security Agreement.
What Is A General Security Agreement?
A General Security Agreement is a legal document that sets out the terms and conditions under which personal property is used as collateral for a secured loan. Essentially, it provides both parties with a clear framework and establishes a legal obligation to follow through with the agreed security measures.
This agreement ensures that if the borrower fails to repay the loan, the lender has statutory rights to claim the collateral – as registered on the Personal Property Securities Register (PPSR). For a deeper understanding of how written agreements create enforceable obligations, you might like to read our What Is A Contract? guide.
Why Do I Need A General Security Agreement?
A General Security Agreement sets out the terms by which your personal property can be held as security for a loan. It provides clarity and legal certainty for both the lender and the borrower, ensuring that everyone is aware of their rights and obligations.
Typically, you should also have a proper Loan Agreement in place – and if you haven’t already drafted one, our Loan Agreement service might be just what you need. In many cases, businesses prefer to have an entirely separate General Security Agreement to add an extra layer of safety.
In today’s dynamic business environment in 2025, ensuring that your secured transactions are well-documented will protect your interests and support smooth debt recovery if repayment issues arise.
What Should A General Security Agreement Contain?
As with any legal agreement, a General Security Agreement should be carefully tailored to the unique circumstances of your arrangement. It should clearly outline the terms and the steps to be taken if the borrower defaults on the loan.
Standard terms typically include:
- How the collateral will be delivered and maintained
- The obligations of both the borrower and the lender
- Any warranties or representations provided by the borrower
- An outline of the lender’s rights to the secured property
- Procedures and consequences in the event of a default
- Conditions under which the agreement can be terminated
- Any requirements for notice prior to specific actions
How Do I Register A General Security Agreement?
Once you enter into a General Security Agreement, one of your first steps is to register your security interest with the Personal Property Securities Register (PPSR).
The registration process in 2025 remains straightforward yet vital. It involves providing a detailed description of the collateral, the particulars of the parties involved, and specifying the duration of the registration. Timely registration is crucial, as it ensures that your agreed security interest is officially recognised and legally enforceable – safeguarding your rights against competing claims.
Who Needs To Sign A General Security Agreement?
Typically, the borrower must sign the agreement to confirm that the proposed security is being offered as collateral. This signature legally binds the borrower to the agreed terms, ensuring that the lender is entitled to pursue the collateral if repayment is not made as promised. In 2025, many lenders also offer digital signing options, making the process more efficient.
What Should I Consider Before Signing A General Security Agreement?
If you’re borrowing money and are asked to sign a General Security Agreement, think carefully before committing. Consider how the agreement might affect your business operations and your ability to offer collateral for future loans.
Ensure that you’re not providing security in excess of what is necessary for the borrowed amount. Over-committing your assets could restrict your access to additional funding or other business opportunities. It’s advisable to have the agreement reviewed by a legal professional – our Contract Review service can help ensure that the security interest is proportionate and complies with 2025’s regulatory standards.
Bear in mind that signing a General Security Agreement with one lender may limit your ability to secure similar arrangements with other parties in the future. Therefore, prioritise your financing strategy and review all terms carefully before signing.
Additional Considerations for 2025
In the current business climate, digital solutions are transforming traditional practices. For example, electronic signatures are now widely accepted, allowing for quicker finalisation of agreements. Additionally, regulatory updates in 2025 have streamlined the registration process with the PPSR, enhancing the protection of both lenders and borrowers. It’s essential to stay informed of these changes to avoid any potential legal risks.
Need Help?
If you need help with a General Security Agreement, our experienced lawyers are here for you. Reach out to our friendly team on 1800 730 617 or team@sprintlaw.com.au for a free, no-obligation consultation about your specific situation. Additionally, consider utilising our Contract Review service to ensure your agreements meet all current legal requirements.
We'll get back to you within 1 business day.
Top 3 Legal Mistakes
Book in a free consultation with us to discuss your legal needs.