General security agreements and the PPSR explained

What is a general security agreement?

A general security agreement is a contract that gives a lender a security interest over a borrower’s personal property, usually all of it, including assets it acquires in the future. For a business, that can mean equipment, stock, vehicles, receivables, bank balances and intellectual property. The point is that instead of pledging a single item, the borrower gives the lender a broad claim over the business.

It is a common feature of secured business loans, overdrafts and working capital facilities. Ownright Custom Finance arranges business and commercial finance Australia-wide, and director Trevor Scott has seen GSAs from every angle: as a clean tool, and as a complication when a business needs to refinance. This guide explains how they work and how the register behind them operates.

What is the PPSR and how does it connect?

The Personal Property Securities Register, or PPSR, is a national online register of security interests in personal property. The government describes it as an online noticeboard, where interests in goods like vehicles and equipment are recorded so that people can check them before buying or lending.

When a lender takes a GSA, it normally registers its interest on the PPSR. Registration matters for two reasons:

1. Visibility. Other lenders, buyers and creditors can see that an interest exists.
2. Priority. Generally, the order of registration helps determine who ranks first if the borrower defaults or becomes insolvent.

A registration lists the secured party, the grantor and a description of the collateral, for example “all present and after-acquired property”. It does not state the loan amount.

What is the difference between a GSA, a specific security and a mortgage?

Type	Covers	Where registered	Common example
General security agreement	Most or all personal property of a business	PPSR	Working capital or secured business loan
Specific security agreement	One named asset or class of assets	PPSR	Equipment or vehicle finance
Mortgage over land	Real property such as a building or farm	State or territory land titles office	Commercial property or home loan
Personal guarantee	A person’s promise to repay	Contract only	Director backing a company loan

Land is dealt with separately. A GSA does not cover real property, so a lender wanting security over a building or farm will also take a registered mortgage, as covered in types of loan security explained.

What does a GSA let the lender do?

The exact rights depend on the contract and the Personal Property Securities Act 2009, but in general a GSA allows a lender to:

• take possession of the secured assets after a default, following the contract and the law;
• sell them and apply the proceeds to the debt;
• appoint a receiver in some circumstances, depending on the documents;
• restrict the borrower from selling or pledging the assets without consent.

Day to day, a business can keep trading and selling stock within the ordinary course of business. The restrictions usually bite when the loan is in trouble or the borrower wants to sell a major asset.

Where are GSAs used?

• Secured business loans: see secured business loans and working capital loans.
• Business refinancing: a new lender often needs the old GSA removed, covered under business loan refinance.
• Invoice finance: a lender providing invoice finance will register an interest over receivables.
• Equipment finance: specific assets are tied via the PPSR, such as in a chattel mortgage or hire purchase.
• Company and trust structures: where the borrower is an entity, see company and trust borrowing.

Compare this with unsecured lending in unsecured vs secured business loans, where lenders may rely on a guarantee and cash flow alone.

What do lenders look at before taking a GSA?

• The business’s trading history and financials. See business loan documents checklist.
• Cash flow and the ability to service the loan.
• Existing PPSR registrations and who has priority.
• The nature and value of the assets, including whether they are already financed.
• Directors’ personal positions if guarantees are requested.
• The ATO position, since tax debts can affect everything. See ATO debt business loans.

How do you search the PPSR?

The PPSR website allows anyone to search by grantor name, ABN, ACN or serial number. Searches typically involve a small fee and return current registrations. People search it to:

• check what is registered against their own business before applying for finance;
• confirm a vehicle or equipment is not tied to a debt before buying;
• confirm a lender has discharged a registration after a loan is repaid.

Checking your own business’s registrations before you apply can prevent surprises, since a forgotten registration from an old facility can slow a refinance.

How do you remove a registration?

When a loan is repaid, the lender should discharge its registration. In practice:

1. Get a payout letter confirming the loan is closed.
2. Ask the secured party in writing to remove the registration.
3. Search the PPSR to confirm it has gone.
4. If it does not respond, the PPSR website sets out the steps the Act provides.

Keep copies of correspondence. Old registrations sometimes linger, and they can confuse a future lender.

What are the risks and common mistakes?

• Signing a GSA without understanding how broad it is.
• Granting a GSA to one lender and then discovering a second lender will not lend behind it.
• Forgetting that directors may carry personal liability through a guarantee.
• Letting expired or paid-out registrations sit on the register.
• Selling assets covered by a registration without the lender’s consent.
• Assuming a GSA covers property or land, when it does not.

This is general information, not legal advice. For contract detail, speak to a solicitor.

How does Ownright approach it?

We look at how a GSA fits into your wider funding. If you want a secured loan but also need room for equipment finance later, the order and scope of registrations matter. If a lender’s GSA is blocking a refinance, we look at whether it can be released or whether a different structure avoids the clash. For businesses that have been turned away, we explore options across business loans with bad credit and low doc business loans, and where property is in the picture, a second mortgage for business.

Documents to have ready

• Company details and structure, including trust deeds where relevant.
• Recent financials and BAS. See how to get your BAS and financial statements.
• A list of current loans, leases and security.
• A PPSR search for your business, if you have one.
• Director identification and asset and liability details.

An illustrative walk-through

This scenario is illustrative only, with no real names and no pricing. A small trading company has a trade vehicle, some stock and invoices outstanding. It applies for a working capital loan. The lender takes a GSA over the company and registers it on the PPSR as “all present and after-acquired property”, and asks the directors for guarantees.

A year later the company wants to finance a new machine. The equipment lender checks the PPSR, sees the first lender’s broad registration and asks how it will rank. The answer may be a priority deed, a purchase money security interest that carves out the new machine, or a request to the first lender to release that item. Planned in advance, this is routine. Left until the day of purchase, it can derail the deal.

What is a purchase money security interest?

A purchase money security interest, or PMSI, is a special kind of security interest that arises when a lender funds the purchase of a specific asset. If registered properly and in time, it can take priority over an earlier general registration for that asset. That is why equipment financiers are often comfortable lending even when a broad GSA already exists. The detail is technical, and the Personal Property Securities Act sets out the rules, so it is worth getting guidance on timing if you are financing a new asset while an existing GSA is in place.

How do GSAs interact with insolvency?

If a business becomes insolvent, a properly registered security interest generally helps the lender rank ahead of unsecured creditors in relation to the secured assets. An unregistered interest may be vulnerable. This is one reason lenders insist on registration, and one reason borrowers benefit from knowing exactly what has been registered against them. If your business is under pressure, speak to your accountant early, and consider whether a restructure or refinance, such as a business loan refinance, can ease the load before problems escalate.

Sounds like secured business finance?

Sounds like you’re looking for a business loan backed by a general security agreement or other business assets. We’re the lending experts in secured business finance and PPSR-backed lending, so see if you qualify and we’ll help you work out the cleanest structure.