Secured and Unsecured Commercial Loans

Just as there are different types of personal loans available the same applies to business commercial loans. All bank loans can be split into two categories; secured loans and unsecured loans:

Secured Loans:

• Some form of collateral is offered as security to the lender, in the case of default payments the lender has the collateral as a guarantee. Collateral can be in the form of property, land, equipment etc. If the value is unknown it is possible to have an appraisal done to confirm the items worth.
• Due to collateral securing the loan, these loans are commonly offered at a lower rate of interest, making them cheaper than an unsecured loan. If regular payments are not made the collateral could be risk of being repossessed by the lender.
• Larger amounts are often available with secured loans and repaid over longer periods.

Unsecured Loans:

• Often used for smaller amounts of lending and repaid over shorter terms
• Credit history of the company is one of the main factors taken into account with this loan type.
• Interest rates tend to be higher due to the lack of security.
• This loan is usually taken over shorter periods of time.

So depending on what the loan is going to be used for and how much is required really dictates the type of loan you apply for.

 

Guide Contents

Commercial Loans
How do Commercial Loans work?
Secured Commercial Loans and Unsecured Commercial Loans
Find the best Commercial Loan
Applying for the best Commercial Loan
Frequently asked questions about Commercial Loans
Where to get more help and advice about Commercial Loans

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