In short
A secured loan agreement documents a defined loan amount, interest and repayment terms alongside the security given for it, in a single agreement rather than a separate facility and security suite. It suits straightforward, one-off lending — a related-party loan, a small business loan, or a bridging loan — where the complexity of a full facility agreement and standalone security deed isn't warranted.
When one document is enough
Not every loan needs the full architecture of a facility agreement plus a separate security suite. For a single, fixed-amount loan with a defined term — a related-party loan between companies in a group, a one-off loan to fund a specific purchase, or a short bridging loan — a self-contained secured loan agreement that combines the commercial terms and the grant of security in one document is often the more efficient and proportionate structure. We use this format where the deal genuinely is simple, and step up to a full facility and security suite where it isn't.
What the security clause needs to do
Where the security is over personal property, the agreement needs to satisfy the requirements of a security agreement under the Personal Property Securities Act 2009 (Cth) so it can be registered on the PPSR — a loosely worded 'the borrower grants security over its assets' clause tucked into a general loan agreement often fails to meet those requirements and leaves the lender unable to perfect the interest at all. We draft the security grant to the same standard as a standalone GSA even when it's embedded in a broader loan agreement.
Interest, repayment and early repayment
The agreement fixes the interest rate (or, for related-party loans, a rate that satisfies any Division 7A or transfer pricing considerations relevant to the borrower's tax position), repayment schedule, and whether early repayment is permitted and on what terms. For related-party loans in particular, getting the interest rate and terms wrong has consequences well beyond contract enforceability — it can affect the tax treatment of the loan for both parties.
Default, acceleration and enforcement
Default triggers — missed payment, insolvency, breach of an undertaking — lead to acceleration of the full outstanding balance and enable enforcement against the security granted. Because there's no separate facility agreement to fall back on, the default and enforcement mechanics need to be complete within this single document, including notice periods and what evidence of default the lender needs to produce.
Registering and monitoring the security
Once the agreement is signed, the security interest still needs to be registered on the PPSR (or, for real property security, lodged with the relevant land title office) to be effective against third parties and on insolvency. We handle the registration as part of the engagement and flag renewal or discharge obligations so the lender isn't left with a stale or forgotten registration once the loan is repaid.
What the fixed fee covers
- Secured loan agreement combining commercial terms and security grant
- PPSR-compliant security clause and registration
- Interest and repayment structuring, including related-party tax considerations where relevant
- Default, acceleration and enforcement provisions
- Discharge documentation on repayment
Mistakes we see
- A generic security clause that doesn't meet PPSA requirements, leaving the interest unable to be perfected
- No PPSR registration after signing, leaving the lender unsecured in practice
- Related-party loan terms that create an unintended tax exposure under Division 7A or transfer pricing rules
- Incomplete default provisions, since there's no separate facility agreement to rely on for enforcement mechanics
- No discharge process agreed upfront, causing delay when the loan is repaid
Who this is for
- Related-party and intercompany lending
- One-off bridging or short-term loans
- Small business loans from a private lender or director
- Straightforward secured loans that don't need a full facility and security suite
Frequently asked questions
- When should I use this instead of a full facility agreement and separate security deed?
- This structure suits a single, fixed-amount loan with straightforward terms. If the loan involves multiple drawdowns, complex covenants, or several classes of security, a full facility agreement and standalone security suite gives clearer, more enforceable documentation.
- Can this document be used for a related-party loan?
- Yes, and it's one of the most common uses. We factor in Division 7A and transfer pricing considerations where the lender or borrower is a related company, since the interest rate and terms can affect the tax treatment for both parties.
- Does the security still need to be registered on the PPSR?
- Yes. Combining the loan terms and security grant into one document doesn't change the perfection requirements under the PPSA — the interest still needs to be registered against the correct collateral class to be effective against third parties.
- What happens on default under this type of agreement?
- The default clause accelerates the outstanding balance and allows the lender to enforce against the security. Because there's no separate facility agreement, we make sure the notice and evidentiary requirements are complete within this one document.
- Is this loan agreement subject to the NCCP Act?
- Only if the borrower is an individual and the loan is for personal, domestic or household purposes, or certain residential property purposes. For business, investment or intercompany lending, it generally sits outside that regime, and we confirm the position in the drafting.
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