Before applying for a commercial loan, it is important to understand whether business loans are secured or unsecured. In this blog post, we will discuss the difference between these two terms and help you determine which type of loan is best suited for your business.
What Are Secured Business Loans?
A secured business loan is a loan that is backed by collateral, meaning something valuable you are required to put up as a guarantee in case you are unable to pay back the loan.
Some types of property typically used as collateral include:
- Real estate property
- Investments (such as stocks and bonds)
Secured loans are typically easier to obtain as there is less risk involved for the lender. Should the borrower default on the loan, the lender can seize the collateral to recoup any losses.
What Are Unsecured Business Loans?
An unsecured business loan, on the other hand, is a loan that is not backed by any collateral. This type of loan is based solely on your creditworthiness and your ability to repay the loan.
Unsecured loans are typically harder to obtain as they involve more risk for the lender. The interest rates on these loans are usually higher as well.
In some cases, lenders may require a personal guarantee, which means you are personally responsible for repaying the loan if the business is unable to.
Secured vs Unsecured Commercial Loans: Which one is right for you?
When deciding which type of loan is right for your business, it ultimately comes down to your financial situation and needs.
If you have collateral to offer and are looking for a larger loan with lower interest rates, a secured loan may be the best option.
However, if you do not have collateral or are looking for a smaller loan, an unsecured loan may be a better fit. It is important to weigh the benefits and drawbacks of each type of loan before making a decision.
Other Factors You Need To Consider
While the secure vs unsecured debate is important, there are other factors to consider when applying for a business loan. These include the loan amount, the repayment terms, and the interest rate.
It is important to work with a lender who is transparent about the costs associated with the loan and who can provide you with a clear understanding of the terms and conditions. At Gellyfish Commercial, our team stands ready to help you achieve your goals!
Gellyfish: Certainty of Execution in Commercial Loans
At Gellyfish Commercial, we offer commercial financing solutions with the certainty of execution you need to take your business to the next level.
We are located in Riverside, and work with clients all over California and beyond. Contact us today by email (firstname.lastname@example.org), telephone (877-800-4493), social media (Facebook, Twitter, LinkedIn), or through the live chat on our home page to schedule a free consultation.