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.

OnDeck Small Business Loans

OnDeck Small Business Loans

Among the largest online business lenders offering term loans and lines of credit at competitive fixed rates.

  • Minimum Amount: $5,000
  • Maximum Amount: $500,000
  • Loan Term: 3 to 36 months
  • Simple online application process with fast decisions
  • Dedicated loan specialists and loyalty benefits
  • Must have been in business for at least one year with annual revenue of $100,000+
  • Must have a personal credit 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 December 13th, 2017
    Name Product Product Description Min Loan Amount Maximum Loan Amount Requirements
    SmartBiz SBA Loans
    Get funding for your small business with a government-backed loan and extended repayment terms.
    Personal credit score of 650+; US citizen or permanent resident; Business must be 2+ years old; Annual revenue of $50,000+; No outstanding tax liens; No bankruptcies or foreclosures in past 3 years.
    Lendio Business Loan Marketplace
    Submit one simple application to potentially get offers from a network of over 75 legit business lenders.
    Must be 18+ and operate a business in the US or Canada.
    OnDeck Small Business Loans
    A leading online business lender offering flexible financing at competitive fixed rates.
    Must have been in business for at least one year with annual revenue of $100K+. Must have a personal credit score of 500+.
    LendingTree Business Loans
    Apply for multiple business financing options in one place including: small business loans, lines of credit, SBA loans, equipment financing and more.
    Varies by lender and type of financing
    Varies by lender and type of financing
    Varies by lender, but you may need good personal credit and a well-documented business plan. Many business lenders will have a minimum business age and annual revenue you'll need to meet.
    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.
    National Business Capital Business Loans
    Get a large business loan to cover your financing needs, no matter what the purpose is.
    Your company must have been in business for at least 6 months and have an annual revenue of at least $180,000.
    LendingClub 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.
    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.
    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.

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