Secured vs unsecured business loans

What each term actually means

A secured loan is tied to a specific asset — property, equipment, or a book of unpaid invoices. If the loan isn't repaid, the lender has a claim over that asset as their fallback. An unsecured loan has no such backing; the lender relies on the company's trading and its promise to repay. That single difference — whether there is collateral behind the debt — drives almost everything else about the two.

What changes for cost and size

Because a secured lender has something to fall back on, they carry less risk, and lower risk usually means a lower rate or a larger amount. Unsecured borrowing removes the safety net for the lender, so it tends to be smaller and priced a touch higher to reflect that. The upside of unsecured is speed and simplicity: there's no asset to value, no charge to register, so the money can move faster. To compare what a given rate really costs across both, run the figures through the true cost of borrowing calculator.

The risk you take on

The real question with a secured loan is what happens if things go wrong. Pledge an asset the business genuinely depends on, and a bad patch could cost you the very thing you trade with. That's why the choice isn't only about price — it's about how much you're willing to put at stake. Unsecured borrowing keeps your assets clear, which is often worth paying a little more for. Read the wider view in business finance fees explained.

Where a personal guarantee fits

Many lenders bridge the gap on unsecured deals by asking a director to sign a personal guarantee — a promise to cover the debt from your own pocket if the company can't. That turns a company loan into a personal risk. Credicorp lends to the company, not to you personally, and takes no personal guarantee, so the borrowing stays where it belongs — on the business. See no personal guarantee loans for how that works.

Which one suits your company

If you need a larger sum against a solid asset and want the keenest rate, secured can make sense — provided you're comfortable with what's pledged. If you want speed, want to keep your assets unencumbered, or the need is short and modest, unsecured is usually the cleaner fit. Check it's affordable either way with the affordability calculator, and browse lenders with choosing a business lender.