What is the difference between secured & unsecured Business Loans?

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Business Loans come in two primary forms: secured and unsecured. The most significant difference between secured and unsecured Business Loans is the presence of collateral. It is an asset that the borrower offers to the lender to guarantee a loan. Usually, it is a residential or commercial property that the applicant owns. The lender may seize the collateral property and sell it if the borrower fails to repay the loan. So, the property is at risk with a secured Business Loan. However, no such collateral is involved in an unsecured Business Loan. Here are a few key differences between the two business loan types:



  • Collateral Requirement: Required for a secured loan, not required for an unsecured loan

  • Credit Score Requirement: Lenient for secured loans, but stricter for unsecured loans

  • Availability: Most financial institutions do not provide unsecured business loans, but secured loans are easily accessible to them

  • Interest Rates: Lower for secured loans than unsecured loans

  • Loan Amount: Higher for secured loans than unsecured loans

  • Repayment Terms: Longer for secured loans than unsecured Business Loans

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