A word on terminology – the PPSA introduces new terms, which are used throughout this book. The terms make sense, but do not match the generally accepted terms used pre-PPSA in Australia in the secured transactions and finance space. It takes some time to become accustomed to the new terms.

Keep in mind that the PPSA is a secured transactions system. Secured transactions essentially secure advances of credit or money (monetary obligations) or the performance of other obligations (non-monetary obligations) by “backing” performance with a fund of assets (the collateral). The terms used by the PPSA reflect these basic principles.

To explain some of the new PPSA terminology by diagram (Diagram 1) , the diagram below shows:

• Lending from Bank A to a borrower called "D" of $100 million dollars, made in two advances (No 1 and No 2 in the diagram).
• The first advance was made on 1 January 2010, under the pre-PPSA “old law”.
• The second advance is made on 1 August 2012, following the commencement of the PPSA.
• The loans are secured by a standard security package of a fixed and floating charge (No 3), which includes a bank account charge, granted on 1 January 2010 at the time of Bank A’s first advance to D.