Compare secured vs. unsecured business loans

Not sure if a secured or unsecured business loan is more suited for your company’s needs? Find out here.

If you’ve decided to apply for financing for your business, finding the right type of loan is an important next step. There’s a range of financing options available, but two of the most common business loan types are secured and unsecured loans. Read further to see how these two loans compare and which is best for your business.

Swift Capital Business Advance

Swift Capital Business Advance

Get quick funding of up to $500,000 with a best price guarantee.

  • Minimum Amount: $5,000
  • Maximum Amount: $500,000
  • Fixed weekly payments to better manage cash flow
  • Personalized service from a business funding expert
  • Requirements:
    - Your business must be at least 1 year old w/ at least $100,000 in annual revenue
    - You must be an American citizen or a permanent resident of the US
    - You must have a personal FICO score of 500+

    What is the difference between secured and unsecured business loans?

    The key difference between secured and unsecured business loans is the guarantee that is required — secured business loans require you to have assets, whether they be business or personal, to attach to the loan, while unsecured business loans do not.

    Secured business loans are typically offered by banks and can help a business access larger amounts. This is because lenders are taking on less of a risk if they know they can recoup their losses should the loan not be repaid. Unsecured business loans tend to come with lower loan amounts and higher rates as the loan is more of a risk.

    Secured and unsecured business loans you can compare

    Rates last updated August 23rd, 2017
    Name Product Product Description Min Loan Amount Maximum Loan Amount Requirements
    Swift Capital Business Advance
    Fund Your Business with a Working Capital Advance – Fast. Simple. Affordable.
    $5,000
    $500,000
    You must be an American citizen or a permanent resident of the US with a personal FICO score of 500 or higher. Your business must be at least 1 year old and making at least $100,000 in annual revenue.
    National Business Capital Business Loans
    Get a large business loan to cover your financing needs, no matter what the purpose is.
    None
    $2,000,000
    Your company must have been in business for at least 3 months or have monthly gross sales of at least $10,000.
    SmartBiz SBA Loans
    Get funding for your small business with a government-backed loan and extended repayment terms.
    30,000
    $5,000,000
    Must have personal credit score of 650 or higher; Must be a US citizen or permanent resident; Business must be 2+ years old; Annual revenue of $50,000 or more; No outstanding tax liens and no bankruptcies or foreclosures in the past 3 years
    Excel Capital Management Small Business Loans
    Get personalized financing options that suit your unique business needs in just a few simple steps.
    Varies by loan type
    Varies by loan type
    Your business must operate in the US, be at least 6 months old and have monthly revenue of at least $15,000.
    Lending Club Business Loans
    With loan terms that vary from 1 to 5 years, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.
    $5,000
    $300,000
    2+ years in business; $75,000+ in yearly sales; No bankruptcies or tax liens; At least 20% ownership of your business; Fair or better personal credit
    Kabbage Small Business Line of Credit
    A simple, convenient online application could securely get the funds you need to grow your business.
    $2,000
    $150,000
    Must have been in business for at least 1 year. Revenue minimum is $50,000 annually or $4,200 per month over the last 3 months.

    Compare up to 4 providers

    What is considered a valuable asset for security?

    When you’re borrowing against your assets, your loan is secured by the residual value that your assets represent. If you’re unable to repay the loan, the lender may seize your assets to cover the outstanding amount. Any of the following could be used as security:

    • Personal or commercial real estate
    • Vehicles
    • Business equipment
    • Investment accounts

    You can also borrow against the valuation of your business as a whole.

    25+ types of collateral you can use to secure different types loans

    Is an unsecured or secured loan best for my business?

    A secured business loan may be a good option for you if:

    • You’re looking to borrow a large amount of money over $1 million.
    • You have several assets you can secure the loan against.
    • You are in a position to make repayments over a long period of time.

    You can usually find secured business loans from banks and lenders that offer SBA loans, but some alternative business lenders also offer secured loan options as well.

    You may want to consider an unsecured business loan if:

    • You have a small- to medium-sized business with few or no valuable assets.
    • Your business is established and has growing monthly revenue.
    • You need a quick cash injection.
    • You can repay the loan over a period of one to five years.

    Many lenders offer unsecured business loans, though you’ll likely need to meet stricter eligibility requirements because the lender is taking on more risks. As a minimum, you’ll generally need to be in business for at least a year and have monthly revenue of at least $10,000.

    Bottom line

    There isn’t one right loan solution for all businesses. By comparing your options and weighing up the pros and cons of each, you can find what’s right for your business.

    Frequently asked questions

    Some business lenders offering equity loans, which are business loans secured by your personal mortgage. Learn more here.

    Not necessarily. If your business has been established for more than a year and you have monthly revenue of over $10,000, you may be able to get an unsecured loan. Keep in mind that secured loans may come with certain benefits such as longer repayment periods and lower interest rates. So they may be worth considering if you have assets to use as collateral.

    Possibly. It may depend on your specific loan type. For example, equipment finance loans may require you to use the equipment you purchase as collateral. Be sure to read the terms of the loan and make sure you’re comfortable with the required security before accepting an offer.

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