Compare finance types
Line of credit vs Secured loan: which is right for your business?
The main difference between a business line of credit and a secured business loan is how they are secured and repaid: a business line of credit suits seasonal or project-based businesses managing cash-flow timing, while a secured business loan suits businesses with property or unencumbered assets borrowing larger amounts over longer terms.
Line of credit vs Secured loan at a glance
| Business line of credit | Secured business loan | |
|---|---|---|
| What it is | A business line of credit is an approved limit you can draw on, repay and redraw as needed, paying interest only on the amount used. It suits businesses whose funding needs rise and fall through the year. | A secured business loan is a lump-sum business loan backed by an asset you pledge — usually residential or commercial property, but sometimes equipment or a general security agreement over the business. Security lowers the lender’s risk, so rates are lower and terms longer than unsecured lending. |
| Amount | $10,000 – $500,000 | $50,000 – $5,000,000 |
| Term | 6–24 months | 12–180 months |
| Indicative rate | 11.5% – 24% p.a. | 6.8% – 13.5% p.a. |
| Rate type | Variable | Fixed or variable |
| Security | Unsecured (guarantee may apply) | Secured by property |
| Repayments | Weekly or monthly minimums on the drawn balance | Monthly, principal and interest or interest-only for a set period |
| Typical speed | 1–3 business days | 2–6 weeks including valuation |
| Best for | Seasonal or project-based businesses managing cash-flow timing | Businesses with property or unencumbered assets borrowing larger amounts over longer terms |
| Consider the other if | A single large purchase you will repay over years | Urgent funding needed this week, or amounts too small to justify valuation costs |
| Tax | Interest and line fees on business use are generally deductible. | Interest on business-purpose borrowing is generally deductible. Establishment and valuation costs may be deductible over time. Confirm with your accountant. |
Rates shown are indicative ranges observed across our lender panel for the period stated. They are not an offer or quote. Your rate depends on your business, the lender, the amount, the term and the security offered. The lender makes the final credit decision.
When to choose a business line of credit
A business line of credit is usually the better fit for seasonal or project-based businesses managing cash-flow timing. Its main advantages are pay interest only on what you draw, redraw without reapplying, buffer against slow-paying customers. Consider the alternative if a single large purchase you will repay over years.
When to choose a secured business loan
A secured business loan is usually the better fit for businesses with property or unencumbered assets borrowing larger amounts over longer terms. Its main advantages are materially lower rates than unsecured lending, larger amounts and terms up to 15 years, interest-only periods available on many facilities. Consider the alternative if urgent funding needed this week, or amounts too small to justify valuation costs.
Business line of credit
A business line of credit is an approved limit you can draw on, repay and redraw as needed, paying interest only on the amount used. It suits businesses whose funding needs rise and fall through the year.
Secured business loan
A secured business loan is a lump-sum business loan backed by an asset you pledge — usually residential or commercial property, but sometimes equipment or a general security agreement over the business. Security lowers the lender’s risk, so rates are lower and terms longer than unsecured lending.