Banking What is the difference between secured and unsecured loans? 7 min read 0 0 3,082 Share on Facebook Share on Twitter Share on Google+ Share on Reddit Share on Pinterest Share on Linkedin Share on Tumblr secured and unsecured loans Secured loans are supported by collateral – the borrower lends the loanee the lender if the borrower fails to repay his loan. Common examples of collateral are real estate, equipment, and vehicles. If you can pay a collateral (unlike many new business owners), the loan becomes less risky so you can get low-interest rates, long-term terms and the ability to earn a large amount of money. In addition to collateral, you must have a lot of cash in the bank and have a good credit score for lunch. Must refer – Personal loans – Personal Loan Interest Rates 10.99% Unsecured loans are not supported by collateral, so the lender typically enforces low-interest rates, low credit limits and reduces the risk of non-repayable debt risk. Banks and other traditional lenders High debt limits require high collateral and accurate credit score for higher credit limits. Alternative business lenders, on the other hand, have provided significant business loans for thousands of businesses without collateral or good credit. The company I founded, United Capital Source, relies on its approval process on the performance of potential borrowers business. We know that small businesses often do not have real estate or expensive equipment because most of our funding programs do not require collateral. These programs have very simple regulations regarding the particular conditions of some industries such as inevitable inequalities in revenue. If your bank statements prove that your business has a consistent cash flow, you can supply the funds you need. This answer will help you to understand two different programs!