Secured vs Unsecured Business Loans

By October 23, 2018Business Finance
Unsecured Business Loans

In this post we are going to be looking at the differences between secured and unsecured business loans. We appreciate that every business is different and will explore both options to provide more detail on what each one means.

What is a Secured Business Loan?

A secured business loan is a loan that is usually secured against an asset for example a property or something else of similar value. In most cases this is a property.

What is a Secured Business Loan for?

A secured business loan is can be used for various purposes, be it everyday cash flow, to buy stock or to inject cash in the business to help it grow. There is no fixed reason for using a secured business loan.

Are there different types of Secured Business Loan?

Yes, there are several different types of secure loan, here are the main ones:

  • Asset Backed Finance
    As the name suggests, this is used to purchase an actual asset, this could be stock for the business, cars, vans or machinery.
    Anything that can have a value put on it so if for any reason the loan wasn’t paid back, the lender has the asset to recoup the amount they have lent.
  • Commercial Mortgages
    These are mortgages secured against a commercial property.
    Commercial property can vary from a small workshop/unit to a car park to a hotel and anything in between.
    A deposit will be needed for this and then the rest can be borrowed.
  • Buy to Let
    These are mortgages secured against properties which are rented out by landlords.
    They can vary from a 1 bedroom flat/apartment to larger detached properties.
    A deposit will be needed and the rest of the amount can be borrowed.

Does your Business qualify for a Secured Loan?

As with all applications for finance, each one is looked at separately and assessed.
To find out more speak to a member of the team on 0345 257 8080 or email hello@moneygiant.com

What Assets can I use to for a Secured Loan?

Assets for a Secured Loan can vary from Machinery to Property. The most common asset used is property, be it a residential or commercial property.

Do I have to give a Personal Guarantee?

This will vary from lender to lender, some will put the asset against the loan and others will ask for a Personal Guarantee. Before any loan is completed you will be given full information on which this will be.

Advantages of a Secured Loan?

The biggest advantage of a Secured Loan is the fact that as the loan is against an actual asset there is a greater chance of the loan being approved; also as the loan will be secured against a property or another asset, as the value may be considerably high the loan value will also be high.

Disadvantages of a Secured Loan?

Although not a direct disadvantage, but as the loan is secured against an asset, if the loan is not paid or there are numerous defaults and missed payments, the lender has the right to the asset to clear the amount. As the loan may be secured against a property you should consider this very carefully when applying and agreeing to a secured loan.

What is a Unsecured Business Loan?

An Unsecured Business Loan is a loan that is provided and approved based on the companies trading history. Company and Business accounts are assessed and the decision is based on this.
As the loan is not secured against any assets, the liability of the loan sits with the company.

What is a Unsecured Business Loan for?

A secured business loan is can be used for various purposes, be it everyday cash flow, to buy stock or to inject cash in the business to help it grow. There is no fixed reason for using a secured business loan.

Advantages of an Unsecured Business Loan?

One of the biggest advantages of an Unsecured Business Loan is speed; Unsecured Business Loans can be approved and paid very quickly, so if there is an urgent need for funds this is the option to consider.

Disadvantages of an Unsecured Business Loan?

An Unsecured Business Loan is a based on the companies trading history, turnover and credit history. If the business has had a difficult year this may go against it meaning that the full amount may not be provided or the application is declined. By speaking to one of the team here at MoneyGiant we can listen to your needs and find out exactly what is needed, we can then speak to our panel of lenders present this and seek approval.

How do I pick the right Business Loan?

Speak to the team here at MoneyGiant, from our initial discussion we will be able to see if a Secured or Unsecured Business Loan is the correct option. We have relationships with over 150 lenders and work with both you and the lender to find you the best solution.

Contact us today on 0345 257 8080 or email hello@moneygiant.com

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