Personal Property Security Register (PPSR)
Registering on the PPSR is a way to let people know if personal property such as cars, goods or company assets have security interests over them.
With the difficulties that small businesses are facing from the effects of the pandemic and natural disasters, business owners are increasingly having to put their hands in their pockets just to stay afloat.
It’s important that any money invested by the owners is therefore protected.
That can be done by registering the money you personally invest in your business in the form of a secured loan on the Personal Property Security Register (PPSR).
If the business gets into financial trouble and cannot pay the loan back to you, but the loan has been properly protected, a PPSR registration puts you in the best position to have the loan repaid in priority to other creditors of the business.
Doing so provides assurance if a business gets into financial difficulty, which can happen suddenly and for a number of reasons including illness or injury, supplier problems, supply chain issues, customer strife, bushfire, drought, flood or pandemic.
This could mean that even though the business fails, you as the owner, can still put food on the table, start again or avoid personal bankruptcy.
Why register on the PPSR?
Registering your security interest correctly on the PPSR can protect you and give you extra rights in the property it’s registered over.
In addition to your right to be repaid your investment, protection with a registered secured loan gives you the best chance to keep your business and rebuild after financial difficulty:
- The loan must be in writing, preferably with a separate security agreement
- Get protected when the loan is first made — if the security is not PPSR-registered then you will rank in priority with the other unsecured creditors, which could mean a significant difference in the amount recovered.
With 30 June looming it is an ideal time to review and protect any money you’ve invested in your business during the last financial year.
Contact Salisbury Accountants on 02 6041 3014 to discuss any investments in your business, or that you may be considering.
PPSR trigger events
Both new and established businesses can register interests on the PPSR:
- putting more money into your business from personal savings
- redrawing on a mortgage, a personal loan from the bank or family and friends, credit cards or superannuation.
- money that has been put into the business by the owner since incorporation over a number of years can also be protected
- whilst it is possible to protect an investment retrospectively, it is always better to put the protection in place at the time an investment is made.
Once an interest is properly protected, you can be confident of getting advice at the first sign of difficulty, with options to remedy the problem.