Secured vs Unsecured Loan: Which is right for my business?

Coins representiing secured vs unsecured loans

Deciding to move forward with applying for a business loan is in itself a task that requires deliberation and prior planning. It can become more complicated when you begin to choose between secured and unsecured loans. These are contrasting options, both with their own pro’s and con’s, and by the end of this article, you’ll hopefully be aware of when each is best utilised.

We’ll start with Secured loans. These are available to companies and individuals who have an asset that they can secure against the loan amount. This is also known as asset-backed lending. They’re often best used by companies looking to acquire new property, machinery and more. Because it’s backed against your asset, there is the potential to lose your asset if you can’t keep up with repayments. An advantage of Secured loans is that you can usually borrow more significant amounts. However, because it’s a larger amount, there are often upfront costs such as administration fees. Furthermore, the property you back the loan against requires proper valuation before any amount can be agreed. These loan types are often longer than their unsecured counterparts, giving you longer periods of time to organise smaller incremental payments.

Unsecured loans are faster than secured loans but can be more challenging to access if your credit history isn’t particularly strong. Businesses often utilise them as working capital loans during more sparse trading seasons. These loans don’t require a property to secure against, but they do usually require a certain level of positive credit history. Unsecured loans tend to be suited for smaller amounts with more flexible repayment methods. This is a bonus as the longer the loan period extends to, the lower the interest rate you’ll get charged across the period.

Whatever loan type you might feel you require, speak to us for our expert opinion and solutions today.

Get in touch on 01273 961755 or at Thanks for reading, see you next time where we’ll be looking into loan-term length, and which are best used in particular circumstances.

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