Secured vs unsecured business loans: which is right for you

The core difference

A secured loan gives the lender a claim over a specific asset — property, equipment, or a debenture over company assets — that it can recover if you default. An unsecured loan has no such charge and relies on the strength of the company's cash flow and record. Less security for the lender means unsecured facilities are usually smaller and priced a little higher.

When secured makes sense

Security suits larger, longer-term borrowing where the lower rate justifies pledging an asset — a commercial mortgage or big equipment purchase, for instance. If you have a suitable asset and want the most capital at the best rate, secured is often the efficient route.

When unsecured is the smarter call

For short-term working capital — covering payroll, buying stock, bridging a slow month — unsecured finance is usually the better fit. It is faster to arrange, puts no specific asset on the line, and matches the short life of the need. The modest rate premium buys speed and flexibility.

Security is not the same as a personal guarantee

An important distinction: security over company assets is different from a personal guarantee, which puts your own assets at risk if the company cannot pay. Credicorp lends to the company with no personal guarantee, so a slow patch never reaches your home. See no personal guarantee loans.

Choosing for your situation

Match the security to the need: long-term, large and asset-backed for a commercial mortgage; short-term, unsecured and no-PG for working capital.

Credicorp lends to your company, not to you personally, and takes no personal guarantee. See indicative terms on business loans, or apply online in minutes.