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Differences
Between Secured & Unsecured Business Loans
When you are applying for a
bank loan, you have the choice between a secured loan and an unsecured
loan - or more likely, your financial lending institution will select
one or the other for you.
A secured loan is when the
borrower puts up collateral - if the borrower defaults on the loan, the
bank has the power to seize the collateral. Real estate is the most common
collateral, although stocks and other assets can be used.
An unsecured loan is a loan
in which no collateral is pledged by the borrower. These loans are generally
only given to businesses and persons that the banks deem as unlikely to
default.
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