Business start-ups & insolvencies are on the rise.

Acis, current as of: 28 October 2020.

We’re seeing a significant uptick in new business registrations brought about by the unique circumstances of 2020, as people cycle out of full-time employment and into self-employment.

Many of these start-ups need investment to get rolling and, as everyone is expecting insolvencies to rise sharply, asset protection has to be a paramount concern for business owners, relatives or associates who are investing.

Insolvency, bankruptcy, family breakdown and death are just some of the reasons why recording loans and securing interests, even when dealing with related parties, makes good business sense.

Why a Loan Agreement?

Record the Interest

The Acis PPSR Loan Agreement is a loan agreement which incorporates a general security agreement. It records the terms of a loan or loans from a lender, or lenders, to a company borrower and can be registered as a security interest on the Personal Properties Security Register (PPSR).

Why is this important?

Consider a situation where a director of a company lends the company $50,000 to kick-start a new venture. That director subsequently passes away, leaving their spouse seeking repayment of the loan from the company to the deceased’s estate. Without a loan agreement that sufficiently records the terms of the loan, there could be a question as to whether a loan was ever made, or whether it was in fact a gift that did not require repayment.

Secure the Interest – PPSR

A loan agreement should be used to evidence that a loan has been made, that repayment is required, and to establish a security interest. The security interest elevates the lender to the status of secured creditor, ranking ahead of unsecured creditors in the event of insolvency.

Registration of a security interest on the PPSR is the primary way that lenders can ensure they are able to recover their loans before payment of other liabilities. The Acis PPSR Loan Agreement evidences the creation of a security interest that may be registered on the PPSR.

Why is this important?

Consider a situation where mum and dad lend their daughter and son-in-law’s new business $100,000, and don’t register the interest on the PPSR. The daughter and son-in-law purchase stock and carry on business for some time. Despite their best efforts, the business is unsuccessful and, as a result, they appoint voluntary administrators. Liabilities far exceed assets and creditors are estimated to receive 30 cents on the dollar.

Mum and Dad will rank as unsecured creditors, along with all other unsecured creditors and receive 30% of what they are owed.

If Mum and Dad had a loan agreement in place and registered their interest on the PPSR they would rank with secured creditors in priority to unsecured creditors and potentially receive repayment of the full amount that they are owed.


Contact the Acis team with queries, for the Acis PPSR Loan Agreement & Registration order form or to view a sample of the Acis PPSR Loan Agreement.

Acis does not provide advice in relation to commercial law, taxation, duty, company law or any other matter. We do not purport to provide advice nor should you construe anything in any correspondence with us, or material provided by us, as advice of any kind.