Is a Small Business Loan Secured or Unsecured?

A small business loan can be either secured or unsecured, depending on the lender’s requirements and the borrower’s financial situation.

A secured small business loan requires the borrower to provide collateral, such as property or equipment, which the lender can seize if the borrower defaults on the loan. The collateral provides security to the lender, reducing the risk of lending to the borrower.

On the other hand, an unsecured small business loan does not require collateral. Instead, the lender relies on the borrower’s creditworthiness and financial history to assess the risk of lending. Unsecured loans typically have higher interest rates than secured loans because they are riskier for the lender.

Whether a small business loan is secured or unsecured will depend on various factors, including the borrower’s credit history, the amount of the loan, and the lender’s policies.