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Secured Vs. Unsecured Commercial Loans

Secured commercial loans are offered based on a collateral. You offer as security a collateral and you will receive a loan (often equaling the equity existent on the respective property). Secured loans always come with a low APR, and affordablemonthly payments. Some collateral examples include accounts receivable, inventory, property/house, car, or business equipment.

Secured loans also represent a smaller risk for the lender, so they are much easier to obtain than unsecured loans for example. Quite often, lenders offer secured loans on good terms and conditions even if you have a poor credit rating. It is important to act very responsibly with a secured loan, because if you default on it, the lender can sell you property to recuperate his losses. If you would like to apply for a secured commercial loan, you should get first a property valuation and then start comparison shopping for loans.

The unsecured asset finance loans on the other hand can be obtained only if you have a good credit rating. The lender does not wish to undertake any risks when he offers you money without a collateral involved, this is why he will acceptyour application only in case of good to excellent credit rating. Thus, your creditworthiness is most important when you are about to apply for an unsecured loan. You should build your credit ratingnicelyduring the months before your application, and this way you will increase your chances of obtaining an unsecured loan with affordable interest rates and good loan to value.

Unsecured loans are not generally offered to people who are at the startup of their business. Generally, you must make proof that you have been in the business for approximately 2 years before you can becomeeligible for an unsecured loan.

As you can note, a secured loans is always a much more efficient solution.

 

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