Are you looking to borrow money, but you do not know exactly what is the difference between secured and unsecured loans?
Difference between secured and unsecured loans: 2 types of different loans
When you were looking around for a business loan, you may have noticed that there are both secured and unsecured loans. These two loans have different interest rates. At Sure Capital we offer both loan options for your needs with our best lenders.
So, what is the real difference between secured and unsecured loans and how does it impact the interest rate?
Secured Business Loans
A secured business loan is a loan guaranteed by an asset, residential or commercial property, vehicles, machinery, or other equipment.
What to expect from a secured business loan?
- Up to $500k.
- From 3 to 60-month term. The secured business loan is a long-term loan.
- Used for any business need.
- Same day funding if the borrower meets the eligibility criteria.
- Weekly, fortnightly or in some cases monthly repayments. This loan has longer repayment terms than an unsecured business loan.
- Interest rate lower than an unsecured business loan thanks to the collateral offered by the borrower to the lender. If the repayment of the debt will not be successful, the chance to lose the asset is very high.
If you are sure you can provide collateral, then this funding option could be what are you looking for your small business.
Unsecured Business Loans
An unsecured business loan gives the opportunity to a small business in Australia to borrow funds for business purposes without the need to provide collateral as security. This type of loan is popular because if the debt cannot be repaid, the financial institution is unable to claim any of the business’s assets.
What to expect from an unsecured business loan?
- Up to $250k without security.
- From 3 to 24-month term (usually 12-month term). The unsecured business loan is a short-term loan.
- Used for any business need.
- Minimum of 3 months in business.
- Fast approving process because it does not require any collateral.
- 24-hours funding.
- Rates change from lender to lender.
- Improved business credit score.
If you want to expand your activity or to purchase stock, machinery, or equipment to increase the profitability of your small business without security, this loan could be the way.
Is it better to have a secured or unsecured loan for your business?
It is difficult to say if a secured loan is better than unsecured one because it depends on the financial situation and needs of the business owner. As we already mentioned, the main difference between these types of funding is that with secured business loans you put down security against the loan. Otherwise if you apply for an unsecured business loan, it is not necessary to provide asset/collateral.
Are you eligible for a business loan?
At Sure Capital, our experienced consultants can help you to choose the best finance options for your business needs. We can assist you through the application process and analyse if you are qualified for an unsecured or secured business loan. See if you qualify.