Could a Secured Business Loan Save You Money?

As a small business, it is likely that there will come a time where you need access to capital. Whether this is to cover your startup and ongoing costs, to manage during a time of difficulty and uncertainty or simply to grow and improve your business, a business loan is often the quickest, easiest and most effective way to get access to a large amount of money.

Secured & Unsecured Loans

It is important to note that there are a number of different business loan types available, including both unsecured and secured business loans. As the name suggests, an unsecured loan involves taking out a loan without any kind of security while a secured business loan will see you put up something as collateral. This might be the business premises, vehicles, equipment or inventory just as a few examples.

Secured Loans Often Cheaper

It is always important to weigh up your options, research and consider your specific needs when taking out a business loan, but you might find that a secured loan is best if you are looking to save money and they are easier to get approved for. This is because you will be viewed as less of a risk to creditors, which means that the amount of interest that you pay will be lower than that of an unsecured business loan. Therefore, you will be paying less money than you would with an unsecured loan and this can add up to a fair amount (depending on the size of the loan).


Of course, there is risk with a secured loan as the lender would legally be entitled to take the asset put up for collateral if you default on the loan. This means that you always need to make sure that you will be able to afford the monthly repayments before agreeing to this type of loan. Crucially, if you enter an agreement for a secured loan but begin to struggle then you should always let the lender know as soon as possible as there may be some flexibility.

Unsecured Loans

If you do not like the idea of a secured loan, you could look to an unsecured loan but this could cost you more in the long run and they can be harder to get approved for, so you may need to take steps to improve your credit rating. Ultimately, it comes down to your situation and risk tolerance, but it is often a secured loan that is best for those looking to save.

There are many times where a small business might require a loan, such as to cover startup costs, to manage in difficult periods or for growth. Often, a secured loan is the best option as it can save you money and it is easier to get approved, but you should always take the time to make the right decision for your needs.