Secured vs. Unsecured Business Loans

3 minutes
May 18, 2025

When considering an online business loan in Brampton, it's important to know the difference between secured and unsecured loans so you can choose the best option for your business.

What is a Secured Loan?

A secured loan requires you to pledge an asset—such as equipment, inventory, or other property—as collateral. If you default on the loan, the lender has the right to seize and sell the asset to recover the outstanding balance.

Benefits of secured loans:

  • Lower interest rates: Lenders face less risk with collateral, so these loans typically come with lower rates.
  • Larger loan amounts: You may qualify for higher borrowing limits and longer repayment terms.
  • Builds business credit: Successfully managing a secured loan can help strengthen your company’s credit profile.

Explore our eligible equipment for secured business loans and see if your assets qualify.

What is an Unsecured Loan?

An unsecured loan is not tied to any specific collateral. Approval is based primarily on your business’s credit history, financials, and overall creditworthiness. If you default, the lender can’t automatically seize your assets, but they may pursue legal action to recover the funds.

Benefits of unsecured loans:

  • No collateral required: Perfect for businesses without valuable assets or for those unwilling to risk their equipment.
  • Faster approval process: Less documentation and no asset appraisal often means quicker access to funds.
  • Flexible use: Funds can be used for a range of business needs, from working capital to expansion.

Learn more about our business loan options for startups if you’re unsure which path is right for you.

Which Option is Right for Your Business?

  • If you want lower rates and can provide collateral, a secured loan may be your best fit.
  • If you value speed, simplicity, and have a strong business profile, an unsecured loan could be the answer.

Have more questions? Visit our FAQ or contact our experts for tailored guidance on your next business loan.

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