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What is it?
When you’re looking to borrow money for your business, lenders usually want to know one thing: how risky is this going to be for us? That’s where secured and unsecured finance come in.
- Secured finance means the loan is backed by something valuable – like property, vehicles, or equipment. If things go pear-shaped, the lender can repossess that asset to get their money back.
- Unsecured finance doesn’t require any assets – it’s based more on your business performance, credit history, and sometimes a personal guarantee.
Pros and Cons
| Secured Finance | Unsecured Finance |
| ✅ Lower interest rates – less risk for the lender | ✅ Faster to access – no asset checks or valuations |
| ✅ Higher borrowing limits | ✅ No risk of losing business or personal assets |
| ✅ Longer repayment terms available | ✅ Great for businesses without physical assets |
| ✅ Loan interest may be tax-deductible | ✅ Loan interest may be tax-deductible |
| ⚠️ Slower application process – requires asset valuation | ⚠️ Higher interest rates (lenders take more risk) |
| ⚠️ You could lose the asset if you default | ⚠️ Usually lower borrowing limits |
| ⚠️ May require legal or admin costs to secure the loan | ⚠️ May need strong cash flow or a personal guarantee |
When is it a good fit?
Secured Finance is often the better choice when:
- You’ve got valuable business assets (like property, machinery, or vehicles)
- You’re looking to borrow a large amount
- You want to keep monthly repayments low
- You’re not in a mad rush to get the funds
Unsecured Finance tends to suit businesses who:
- Need money quickly (within days, not weeks)
- Don’t own any major assets
- Only need a smaller amount for a short-term gap
- Prefer to avoid risking property or equipment
Other secured funding options to consider
Asset Finance
Instead of using your existing assets to raise cash, asset finance is all about acquiring something new – like equipment or vehicles – with the item itself acting as security. It’s technically a type of secured finance, but the goal is different.
Learn more about » Asset Finance
Property Refinancing
Got equity in a commercial or residential property? Refinancing can unlock funding, sometimes at much better rates than a traditional secured loan.
When it’s a good idea:
- You’re sitting on property equity
- You want to raise a large amount with lower monthly repayments
- You’re not in a rush (these things take time)
When it’s not:
- You’re close to maxing out the mortgage
- You need the money urgently
- Your income or credit position has weakened since the original loan
Want to explore this? » Get in touch
Extra tips and things to watch out for
- Even with unsecured finance, most lenders want a personal guarantee – especially if your business is new or has patchy credit history.
- With secured loans, be crystal clear on what’s at risk. If you default, the lender will come after the asset.
- Loan interest and related fees can often be claimed as business expenses – but always check with your accountant first.
Still unsure?
Try our Finance Finder Tool – a quick way to see what kind of funding suits your business best.
Or give us a bell for a chat – no pressure, no jargon, no daft promises.
