Every business at some stage of their life will require some form of funding; whether this be at the start up phase or during periods of growth and even perhaps during times of cash flow uncertainty.

If you have ever considered any funding then you may have come across the terms of ‘secured loans’ and ‘unsecured loans’. Both of these loans are completely different and before you make an application it is key to understand the difference between the two. 

Put very simply, secured loans are a credit agreement in which a person may use their property as security. Many people opt for this option if they are a homeowner or are looking for a perhaps cheaper option. Of course, this is outweighed by the threat of losing your home if repayments were not kept up of course!

Secured loans will of course by the nature of the beast not be available for people whom do not own homes but those they are available to can borrow anything from around £25,000 up to around £5,000,000. As with many things in life, the amount you could borrow and the interest available will all differ depending on the individual and the amount of equity available in the home. 

Secured loans can be truly beneficial for those with a not so good credit score and those whom are hoping to borrow larger amounts. There may also be the possibility of going through interest only periods too.

Unsecured loans on the other side are perhaps the most go-to choice for businesses looking for working capital. Unsecured loans are available to everyone with a reasonable credit score and for those whom do not own their own property. These loans can come from banks and other various lenders; primarily online companies and other peer-to-peer providers. 

Unsecured loans offer quite a bit of flexibility when it comes to repayment time periods and normally range from one to five years of fixed payments. On average, the best loan rates are set for people looking to repay their loan over a period of three to five years. Of course, this then means a higher interest rate for shorter-term loans. 

Unsecured loans are normally secured on the terms of a personal guarantee and can allow an individual to borrow anything from £5000 up to £500,000. You may find that unsecured loans are approved very quickly and transfer of funds tend to come through very swiftly too. 

If you are considering applying for some form of business loan then we recommend you take your time and look around for the choice that suits yourself and your circumstances. An unsecured loan may possibly give you the short term option that you and your business needs in a swift manner. A secured loan may give you the chance to borrow more money and allow you to grow or expand your business as best you can. 

If you ever need more advice on loan options for your business have a look at www.eliteedgebusiness.co.uk.