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SECURED LOANS VS. UNSECURED LOANS

SECURED LOANS VS. UNSECURED LOANS

Small business owners should know the available loan options when finances are needed for unexpected costs or business expansion. Large banks offer secured loans to business owners while alternative loan companies offer unsecured loans. Small business owners and merchants can apply for secure or unsecure loans so it is important to know the difference.

1. SECURED LOAN

A secured loan is popular with larger banks and requires a loan applicant to put up collateral such as a home mortgage or equipment to guarantee repayment in the event of a loan default. The bank asks for collateral to limit risks when offering the loan but the collateral requirement may be overbearing for a small business or merchant.

2. UNSECURED LOAN

An unsecured loan is granted to loan applicants based on a variety of factors such as creditworthiness, business income and length of time in business. An unsecured loan does not require collateral and has less restrictive requirements.

Business owners should consider unsecured loan options such as alternative business loans to help with cash flow during business emergencies. Alternative loan providers such as Timestar Lenders can provide business owners with unsecured loans to quickly handle emergencies.

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