Among small business owners, one common query related to loans is whether all business loans should be secured with property or assets. The simple answer to this query is no. Security is required only in specific cases, and some financial institutions lend to small businesses without any collateral. Let’s discuss the difference between secured and unsecured business loans in Perth.
What are secured business loans?
- Collateral required, such as property, financial assets, etc.
- Generally large amounts are approved.
- They have longer terms of up to 2 years.
- Ideal for established businesses having good credit histories.
What are their benefits?
- Since secured business loans are secured using real estate or assets, the interest rates are low.
- Low risk for the lender.
- Larger amounts can be easily approved.
What are unsecured business loans?
- No security is required as collateral for obtaining the loan.
- Both small and large amounts can be borrowed, but up to a certain limit.
- The loan terms are shorter.
- Suitable for startups and small businesses with average credit history.
What are their benefits?
- Collateral isn’t necessary for unsecured business loans in Perth.
- The application process is easy and can be completed online within minutes.
- Funds can receive approvals on the same day, but processing times will vary across lenders.
- A good credit history is not necessary.
- The terms are flexible.
Which is the best option?
Both loan options can be advantageous depending on the situation and goals of your business. Secured loans are good for purposes like purchasing equipment or stock or increasing cash flow. You can also get truck loans by mortgaging property or assets. If your business is a startup or doesn’t have a grand credit history, unsecured business loans are the best option for you. So consider your objectives carefully before finalising your decisions.
