What is a secured business loan?
When you take out a secured business loan, the bank asks for an asset that you own to use as security.
A security is collateral, a kind of guarantee you’re giving to say that you’ll pay back the loan.
This security might take the form of a commercial or residential property, business equipment or money owed to you by your customers (accounts receivable).
Choosing a secured business loan comes with advantages. You can borrow a larger amount at a lower interest rate to help drive your business growth.
However, approval times may be longer if the bank needs to value your asset. And, if you’re unable to repay your business loan, your bank may sell your asset to recoup the debt.
What is an unsecured business loan?
Just like it says on the label, an unsecured business loan doesn’t use your asset as security.
Generally speaking, your bank needs to see that you’ll be able to repay the loan. You can show this by proving that your business has enough cashflow to cover your repayments and other commitments. A credit history free of defaults also helps.
Unsecured business loans can be a great choice for smaller loan amounts, but because your bank won’t take security, interest rates for unsecured business loans are higher in comparison to secured loans.
You can apply for an unsecured business loan online or in the Business+ app. There’s no paperwork involved so your application is finished in minutes, not hours or days.
Do your research
Before you apply for a small business loan, take some time to review what your business needs, how you’ll use the funds to help your business succeed, how much it will cost and what you can afford to borrow.
And while you wear many hats as a small business owner, you don’t need to be a finance expert to find the right loan. A great place to start your research is Great Southern Bank’s Business+ Unsecured Loan specifically designed for small businesses.
You can borrow up to $50,000 without security. And you can rest easy knowing your repayments won’t change over the life of the loan. Get started online or download the Business+ app.
For everything you need to know about running a successful business, visit our online Business Hub.
