{"id":34327,"date":"2021-09-20T15:44:54","date_gmt":"2021-09-20T15:44:54","guid":{"rendered":"https:\/\/swoopfunding.com\/ie\/uk\/blog\/secured-vs-unsecured-business-loans\/"},"modified":"2024-07-22T13:31:42","modified_gmt":"2024-07-22T13:31:42","slug":"secured-vs-unsecured-business-loans","status":"publish","type":"blog","link":"https:\/\/swoopfunding.com\/ie\/business-loans\/secured-vs-unsecured-business-loans\/","title":{"rendered":"Secured vs. unsecured business loans \u2013 what\u2019s the difference?"},"content":{"rendered":"\n<p>Whether it\u2019s in the context of business loans or, for that matter, any type of finance, the distinction between secured and unsecured lending is a crucial one. Let&#8217;s take a look at different types of \u2018security\u2019 you might want to offer up to a lender, the pros and cons of secured vs. unsecured business loans, and what you should consider before you take out either type of loan. Let\u2019s first look at some definitions.<br><\/p>\n\n\n<style>.wp-block-kadence-spacer.kt-block-spacer-34327_5b8664-13 .kt-block-spacer{height:20px}.wp-block-kadence-spacer.kt-block-spacer-34327_5b8664-13 .kt-divider{border-top-width:1px;height:1px;border-top-color:#eee;width:80%;border-top-style:solid}<\/style>\n<div class=\"wp-block-kadence-spacer aligncenter kt-block-spacer-34327_5b8664-13\"><div class=\"kt-block-spacer kt-block-spacer-halign-center\"><\/div><\/div>\n\n\n\n<h2 class=\"wp-block-heading h3\" id=\"what-is-a-secured-business-loan\"><strong>What is a secured business loan?<\/strong><\/h2>\n\n\n\n<p>A <a href=\"https:\/\/swoopfunding.com\/ie\/business-loans\/secured-business-loans\/\">secured business loan<\/a> allows you to use an asset \u2013 or the total value of multiple assets \u2013 as security against the amount you borrow. The lender uses your asset(s) as a form of guarantee and is therefore often able to offer better repayment terms than you\u2019d find with an unsecured business loan.\u00a0<\/p>\n\n\n\n<p>Secured <a href=\"https:\/\/swoopfunding.com\/ie\/business-loans\/\">business loans<\/a> are typically secured against property, equipment, machinery or land \u2013 but lenders might use any high-value assets that either you or your business might own. There are other types of secured lending though. For example,\u00a0<a href=\"https:\/\/swoopfunding.com\/ie\/business-loans\/invoice-finance\/\">invoice finance<\/a>\u00a0allows you to use your invoices and <a href=\"https:\/\/swoopfunding.com\/ie\/business-glossary\/accounts-receivable\/\">accounts receivable<\/a> (i.e. money owed to your business) as security for a loan.\u00a0<\/p>\n\n\n\n<p>With a secured loan, the security of course reduces the risk for lenders. This not only increases your chances of actually getting a loan, but usually allows you to borrow more money, for a longer term \u2013 and you\u2019ll be offered better interest rates compared to those for an unsecured loan.<\/p>\n\n\n<style>.wp-block-kadence-spacer.kt-block-spacer-34327_0397c0-d9 .kt-block-spacer{height:20px}.wp-block-kadence-spacer.kt-block-spacer-34327_0397c0-d9 .kt-divider{border-top-width:1px;height:1px;border-top-color:#eee;width:80%;border-top-style:solid}<\/style>\n<div class=\"wp-block-kadence-spacer aligncenter kt-block-spacer-34327_0397c0-d9\"><div class=\"kt-block-spacer kt-block-spacer-halign-center\"><\/div><\/div>\n\n\n\n<h2 class=\"wp-block-heading h3\" id=\"what-is-an-unsecured-business-loan\"><strong>What is an unsecured business loan?<\/strong><\/h2>\n\n\n\n<p>Unsecured business loans are a relatively simple \u2013 and fast \u2013 way to get an affordable cash injection if your business lacks assets or if you don\u2019t want to secure what assets you have against your loan.<\/p>\n\n\n\n<p>You can usually access funding quickly, often on the same day.<\/p>\n\n\n\n<p>With an <a href=\"https:\/\/swoopfunding.com\/ie\/business-loans\/unsecured-business-loans\/\">unsecured business loan<\/a>, you repay the loan in monthly or quarterly instalments over a fixed time frame, and you can choose to take out a short-term loan or medium\/long-term loan (i.e. \u2018term\u2019 loan), depending on your business needs. Look at the small print to find out whether you can pay off your loan early (in some cases without a fee).<\/p>\n\n\n<style>.wp-block-kadence-spacer.kt-block-spacer-34327_48c690-33 .kt-block-spacer{height:20px}.wp-block-kadence-spacer.kt-block-spacer-34327_48c690-33 .kt-divider{border-top-width:1px;height:1px;border-top-color:#eee;width:80%;border-top-style:solid}<\/style>\n<div class=\"wp-block-kadence-spacer aligncenter kt-block-spacer-34327_48c690-33\"><div class=\"kt-block-spacer kt-block-spacer-halign-center\"><\/div><\/div>\n\n\n\n<h2 class=\"wp-block-heading h3\" id=\"how-do-i-decide-whether-a-secured-or-unsecured-business-loan-suits-me-best\"><strong>How do I decide whether a secured or unsecured business loan suits me best?<\/strong><\/h2>\n\n\n\n<p>If you\u2019re not entirely sure after reading the definitions above, we don\u2019t blame you. Have a read through the pros and cons we\u2019ve listed below and see if that clarifies things.<\/p>\n\n\n<style>.wp-block-kadence-spacer.kt-block-spacer-34327_50e1f0-ef .kt-block-spacer{height:20px}.wp-block-kadence-spacer.kt-block-spacer-34327_50e1f0-ef .kt-divider{border-top-width:1px;height:1px;border-top-color:#eee;width:80%;border-top-style:solid}<\/style>\n<div class=\"wp-block-kadence-spacer aligncenter kt-block-spacer-34327_50e1f0-ef\"><div class=\"kt-block-spacer kt-block-spacer-halign-center\"><\/div><\/div>\n\n\n\n<h2 class=\"wp-block-heading h3\" id=\"what-are-the-pros-and-cons-of-a-secured-business-loan\"><strong>What are the pros and cons of a secured business loan?<\/strong><\/h2>\n\n\n \n <div class=\"pros\">\n <div class=\"header-pro\">\n <img loading=\"lazy\" decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swoopfunding.com\/ie\/wp-content\/themes\/swoopMW50\/assets\/images\/pros.svg\" width=\"72\" height=\"72\" alt=\"Pros\">\n <p class=\"title\">Pros<\/p>\n <\/div>\n <div class=\"content-pro\">\n <p><\/p>\n<p>If you offer assets as security against a loan, lenders take on less risk than they would with an unsecured loan, increasing your chances of being approved if you\u2019ve been declined for an unsecured loan. Security also means lenders are more likely to lend larger amounts, over longer time periods, and at lower interest rates.<\/p>\n<p> <\/p>\n<p>Here\u2019s a bit more detail:<\/p>\n<p> <\/p>\n<ul>\n<li><strong>Interest rates are lower\u00a0<\/strong>\u2013 the main advantage of offering assets as security is that you\u2019ll find secured business loans are cheaper than unsecured loans and many other types of business borrowing. This is because lenders have a strong secondary source of repayment and so the risk of them losing money is reduced<\/li>\n<li><strong>You can usually borrow more<\/strong>\u00a0\u2013 the amount you can borrow depends on the value of the asset(s) you put up as security against your loan. You might even be able to borrow 100% of the net value of these assets.<\/li>\n<li><strong>Repayment terms are longer\u00a0<\/strong>\u2013 if you\u2019re allowed to repay your loan over a longer period of time, your monthly payments will be lower. This eases the burden on your cash flow so that you can focus on growing your business.<\/li>\n<li><strong>You don\u2019t need a solid trading history<\/strong>\u00a0<strong>or good credit history<\/strong>\u00a0\u2013 there\u2019s less need for you to have a good trading history or a good credit history (credit file\/report \u2013 they mean the same thing), because any assets you use are a form of guarantee for the lender. This makes secured loans a good option for a startup without any annual accounts or trading history, or for a business with a less-than-perfect credit history. Lenders will take a view on any previous problems but they might require a director\u2019s personal guarantee as an additional form of security.<\/li>\n<\/ul>\n<p><\/p>\n <\/div>\n <\/div>\n \n\n\n<style>.wp-block-kadence-spacer.kt-block-spacer-34327_6c5868-ac .kt-block-spacer{height:20px}.wp-block-kadence-spacer.kt-block-spacer-34327_6c5868-ac .kt-divider{border-top-width:1px;height:1px;border-top-color:#eee;width:80%;border-top-style:solid}<\/style>\n<div class=\"wp-block-kadence-spacer aligncenter kt-block-spacer-34327_6c5868-ac\"><div class=\"kt-block-spacer kt-block-spacer-halign-center\"><\/div><\/div>\n\n\n \n <div class=\"cons\">\n <div class=\"header-cons\">\n <img loading=\"lazy\" decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swoopfunding.com\/ie\/wp-content\/themes\/swoopMW50\/assets\/images\/cons.svg\" width=\"72\" height=\"72\" alt=\"Cons\">\n <p class=\"title\">Cons<\/p>\n <\/div>\n <div class=\"content-cons\">\n <p><\/p>\n<p>These aren\u2019t all exactly \u2018cons\u2019 \u2013 rather they\u2019re \u2018things to consider\u2019 before you take out an unsecured business loan:<\/p>\n<p> <\/p>\n<ul>\n<li>You\u2019ll need to have assets in your business that you\u2019re willing to put up as security \u2013 this won\u2019t suit all businesses.<\/li>\n<li>If you can\u2019t repay your secured loan, the lender can sell the asset(s) to recoup the cost of the loan.<\/li>\n<li>You\u2019ll most likely have to pay money upfront \u2013 valuation fees and also legal fees if the lender places a legal charge on your property. If the valuation isn\u2019t favourable, your loan might be declined or smaller than you need but you\u2019ll still have paid the valuation fee.<\/li>\n<li>It\u2019ll take longer (possibly weeks) to access funds, compared to other types of financing, because you\u2019ll have to wait for the lender to complete the <a href=\"https:\/\/swoopfunding.com\/ie\/business-glossary\/due-dilligence\/\">due diligence<\/a> processes.<\/li>\n<li>If you\u2019re borrowing over a longer term, you should consider the total cost of the loan. Even if the interest rate is low, borrowing costs can mount up over the long term.<\/li>\n<\/ul>\n<p><\/p>\n <\/div>\n <\/div>\n \n\n\n<style>.wp-block-kadence-spacer.kt-block-spacer-34327_d9d210-8e .kt-block-spacer{height:40px}.wp-block-kadence-spacer.kt-block-spacer-34327_d9d210-8e .kt-divider{border-top-width:1px;height:1px;border-top-color:#eee;width:80%;border-top-style:solid}<\/style>\n<div class=\"wp-block-kadence-spacer aligncenter kt-block-spacer-34327_d9d210-8e\"><div class=\"kt-block-spacer kt-block-spacer-halign-center\"><\/div><\/div>\n\n\n\n<h2 class=\"wp-block-heading h3\" id=\"what-are-the-pros-and-cons-of-an-unsecured-business-loan\"><strong><strong>What are the pros and cons of an unsecured business loan?<\/strong><\/strong><\/h2>\n\n\n\n<p>These are the converse of the list for secured loans but it always helps to spell things out &#8211; <\/p>\n\n\n \n <div class=\"pros\">\n <div class=\"header-pro\">\n <img loading=\"lazy\" decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swoopfunding.com\/ie\/wp-content\/themes\/swoopMW50\/assets\/images\/pros.svg\" width=\"72\" height=\"72\" alt=\"Pros\">\n <p class=\"title\">Pros<\/p>\n <\/div>\n <div class=\"content-pro\">\n <ul>\n<li>You can access funds quickly and simply, compared to other types of lending.<\/li>\n<li>You don\u2019t need to put up any assets as security.<\/li>\n<li>You can plan your repayments \u2013 fixed monthly payments over an agreed time period.<\/li>\n<li>You will only pay a small upfront cost (if at all).<\/li>\n<\/ul>\n <\/div>\n <\/div>\n \n\n\n<style>.wp-block-kadence-spacer.kt-block-spacer-34327_e5a836-0e .kt-block-spacer{height:20px}.wp-block-kadence-spacer.kt-block-spacer-34327_e5a836-0e .kt-divider{border-top-width:1px;height:1px;border-top-color:#eee;width:80%;border-top-style:solid}<\/style>\n<div class=\"wp-block-kadence-spacer aligncenter kt-block-spacer-34327_e5a836-0e\"><div class=\"kt-block-spacer kt-block-spacer-halign-center\"><\/div><\/div>\n\n\n \n <div class=\"cons\">\n <div class=\"header-cons\">\n <img loading=\"lazy\" decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swoopfunding.com\/ie\/wp-content\/themes\/swoopMW50\/assets\/images\/cons.svg\" width=\"72\" height=\"72\" alt=\"Cons\">\n <p class=\"title\">Cons<\/p>\n <\/div>\n <div class=\"content-cons\">\n <p>The main downside of not offering assets as security is that lenders take on more risk than they would with a secured business loan, which means they\u2019ll most likely lend smaller amounts, over shorter time periods, and at higher interest rates. That said, if your business has a solid trading history and a good credit rating, you might be offered more favourable terms.<\/p>\n <\/div>\n <\/div>\n \n\n\n<style>.wp-block-kadence-spacer.kt-block-spacer-34327_e5fa95-ed .kt-block-spacer{height:40px}.wp-block-kadence-spacer.kt-block-spacer-34327_e5fa95-ed .kt-divider{border-top-width:1px;height:1px;border-top-color:#eee;width:80%;border-top-style:solid}<\/style>\n<div class=\"wp-block-kadence-spacer aligncenter kt-block-spacer-34327_e5fa95-ed\"><div class=\"kt-block-spacer kt-block-spacer-halign-center\"><\/div><\/div>\n\n\n\n<h2 class=\"wp-block-heading h3\" id=\"still-unsure-what-s-best-for-your-business\"><strong>Still unsure what&#8217;s best for your business?<\/strong><\/h2>\n\n\n\n<p>Now you\u2019re up to speed on the pros and cons of secured vs unsecured lending, you should have a clearer idea about what will suit your business best. We\u2019d suggest you home in on the finer detail by reading our in-depth <a href=\"https:\/\/swoopfunding.com\/ie\/business-loans\/secured-business-loans\/\">secured business loans<\/a> and <a href=\"https:\/\/swoopfunding.com\/ie\/business-loans\/unsecured-business-loans\">unsecured business loans<\/a> guides. If you\u2019re still undecided, or you think that you might want to learn more about other types of finance options, <a href=\"https:\/\/ireland.swoopfunding.com\/stage\">register with Swoop<\/a> and our funding managers will be happy to help.<\/p>\n\n\n<style>.wp-block-kadence-spacer.kt-block-spacer-34327_2d0d38-0a .kt-block-spacer{height:20px}.wp-block-kadence-spacer.kt-block-spacer-34327_2d0d38-0a .kt-divider{border-top-width:1px;height:1px;border-top-color:#eee;width:80%;border-top-style:solid}<\/style>\n<div class=\"wp-block-kadence-spacer aligncenter kt-block-spacer-34327_2d0d38-0a\"><div class=\"kt-block-spacer kt-block-spacer-halign-center\"><\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Whether it\u2019s in the context of business loans or, for that matter, any type of finance, the distinction between secured and unsecured lending is a crucial one. Let&#8217;s take a look at different types of \u2018security\u2019 you might want to offer up to a lender, the pros and cons of secured vs. unsecured business loans, [&hellip;]<\/p>\n","protected":false},"author":25,"featured_media":34328,"comment_status":"closed","ping_status":"closed","template":"","category":[1371,1362,1370],"class_list":["post-34327","blog","type-blog","status-publish","has-post-thumbnail","hentry","category-blog","category-funding-resources","category-loans"],"acf":[],"featured_image_urls_v2":{"full":["https:\/\/swoopfunding.com\/ie\/wp-content\/uploads\/sites\/6\/2024\/07\/Screenshot-2021-03-24-at-5.14.07-p.m..png",1790,1194,false],"thumbnail":["https:\/\/swoopfunding.com\/ie\/wp-content\/uploads\/sites\/6\/2024\/07\/Screenshot-2021-03-24-at-5.14.07-p.m.-150x150.png",150,150,true],"medium":["https:\/\/swoopfunding.com\/ie\/wp-content\/uploads\/sites\/6\/2024\/07\/Screenshot-2021-03-24-at-5.14.07-p.m.-300x200.png",300,200,true],"medium_large":["https:\/\/swoopfunding.com\/ie\/wp-content\/uploads\/sites\/6\/2024\/07\/Screenshot-2021-03-24-at-5.14.07-p.m.-768x512.png",768,512,true],"large":["https:\/\/swoopfunding.com\/ie\/wp-content\/uploads\/sites\/6\/2024\/07\/Screenshot-2021-03-24-at-5.14.07-p.m.-1024x683.png",1024,683,true],"1536x1536":["https:\/\/swoopfunding.com\/ie\/wp-content\/uploads\/sites\/6\/2024\/07\/Screenshot-2021-03-24-at-5.14.07-p.m.-1536x1025.png",1536,1025,true],"2048x2048":["https:\/\/swoopfunding.com\/ie\/wp-content\/uploads\/sites\/6\/2024\/07\/Screenshot-2021-03-24-at-5.14.07-p.m..png",1790,1194,false],"image_blog":["https:\/\/swoopfunding.com\/ie\/wp-content\/uploads\/sites\/6\/2024\/07\/Screenshot-2021-03-24-at-5.14.07-p.m.-408x252.png",408,252,true],"image_blog_full":["https:\/\/swoopfunding.com\/ie\/wp-content\/uploads\/sites\/6\/2024\/07\/Screenshot-2021-03-24-at-5.14.07-p.m.-1775x660.png",1775,660,true],"image_podcast":["https:\/\/swoopfunding.com\/ie\/wp-content\/uploads\/sites\/6\/2024\/07\/Screenshot-2021-03-24-at-5.14.07-p.m.-397x298.png",397,298,true],"image_banking":["https:\/\/swoopfunding.com\/ie\/wp-content\/uploads\/sites\/6\/2024\/07\/Screenshot-2021-03-24-at-5.14.07-p.m.-30x20.png",30,20,true],"image_blog_internal":["https:\/\/swoopfunding.com\/ie\/wp-content\/uploads\/sites\/6\/2024\/07\/Screenshot-2021-03-24-at-5.14.07-p.m.-840x480.png",840,480,true],"image_blog_medium":["https:\/\/swoopfunding.com\/ie\/wp-content\/uploads\/sites\/6\/2024\/07\/Screenshot-2021-03-24-at-5.14.07-p.m.-1024x500.png",1024,500,true],"image_single_banking":["https:\/\/swoopfunding.com\/ie\/wp-content\/uploads\/sites\/6\/2024\/07\/Screenshot-2021-03-24-at-5.14.07-p.m.-80x53.png",80,53,true]},"post_excerpt_stackable_v2":"<p>Whether it\u2019s in the context of business loans or, for that matter, any type of finance, the distinction between secured and unsecured lending is a crucial one. Let&#8217;s take a look at different types of \u2018security\u2019 you might want to offer up to a lender, the pros and cons of secured vs. unsecured business loans, and what you should consider before you take out either type of loan. Let\u2019s first look at some definitions. What is a secured business loan? A secured business loan allows you to use an asset \u2013 or the total value of multiple assets \u2013 as&hellip;<\/p>\n","category_list_v2":"<a href=\"https:\/\/swoopfunding.com\/ie\/category\/blog\/\" rel=\"category tag\">Blog<\/a>, <a href=\"https:\/\/swoopfunding.com\/ie\/category\/funding-resources\/\" rel=\"category tag\">Funding resources<\/a>, <a href=\"https:\/\/swoopfunding.com\/ie\/category\/loans\/\" rel=\"category tag\">Loans<\/a>","author_info_v2":{"name":"Arabella McAvoy","url":"https:\/\/swoopfunding.com\/ie\/author\/arabella-mcavoy\/"},"comments_num_v2":"0 comments","_links":{"self":[{"href":"https:\/\/swoopfunding.com\/ie\/wp-json\/wp\/v2\/blog\/34327","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/swoopfunding.com\/ie\/wp-json\/wp\/v2\/blog"}],"about":[{"href":"https:\/\/swoopfunding.com\/ie\/wp-json\/wp\/v2\/types\/blog"}],"author":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/ie\/wp-json\/wp\/v2\/users\/25"}],"replies":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/ie\/wp-json\/wp\/v2\/comments?post=34327"}],"version-history":[{"count":2,"href":"https:\/\/swoopfunding.com\/ie\/wp-json\/wp\/v2\/blog\/34327\/revisions"}],"predecessor-version":[{"id":34331,"href":"https:\/\/swoopfunding.com\/ie\/wp-json\/wp\/v2\/blog\/34327\/revisions\/34331"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/ie\/wp-json\/wp\/v2\/media\/34328"}],"wp:attachment":[{"href":"https:\/\/swoopfunding.com\/ie\/wp-json\/wp\/v2\/media?parent=34327"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swoopfunding.com\/ie\/wp-json\/wp\/v2\/category?post=34327"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}