Published on 24 September 2025
Posted in
The process of applying for business funding is typically straightforward, or it should be, until you stumble across keywords that you are unfamiliar with and could have a huge impact on the type of loan you apply for.
“Secured” and “Unsecured” loans, what are they?
It’s important to understand what each of these loan types mean, the benefits they have and ultimately, which works better for your business.
These loans, offered by banks and other financial institutions, are borrowed against an asset you own. 9 times out of 10 this would be a house, but it could also be a car, any other items of high value or all of the above.
Banks will often opt for secured business funding, for their own security. If you were unable to make payments back on the loan, the asset the money was borrowed against would be seized to make up the missing funds. This means the bank doesn’t lose out, but you might.
Pros and Cons
Pros:
With an added level of security, banks and lenders are far more susceptible to offering a higher amount on Secured Loans.
With Secured Loans, banks offer longer terms for you to make your repayments; often 5 or more years.
Even without a squeaky clean credit history, you could be approved for business funding through a Secured loan, due to the added security of the business asset.
Cons:
It goes without saying that, with Secured loans, your personal assets are at risk in every business decision.
As assets often need to be valued and evaluated before they can be confirmed as suitable for a Secured Loan, the approval time can be far longer than other loan types, that could have funds in your account the same day.
In contrast, an Unsecured business loan is business funding that isn’t tied to any type of personal asset, like short-term loans which are great for steadying cashflow or supporting growth.
Unsecured business loans are ideal for small businesses with structured plans for expansion but will often ask for a personal guarantee.
Pros and Cons
Pros
As these loans are usually for a relatively small sum, you could have funds in your account the same day. In comparison to secured business loans, the turn around time for unsecured business loans are far quicker.
With an unsecured loan, you have far more flexibility on what the funding can be used for. Invest in your staff, expand your team or use the funds to manage gaps in your cashflow during seasonal troughs.
Ideal for smaller businesses that don’t have as many assets that a loan can be used against, unsecured loans do not require any collateral and therefore are less of a risk.
Cons
Whilst you may not have to use any assets in securing this loan, you could be asked for a personal guarantee. This means you are personally responsible for repaying the funds if the business struggles to.
Missing any of the scheduled repayments will go against your business credit score, affecting your chances of securing business funding in the future. When a personal guarantee is involved, this may also affect your personal credit score.
So, which is better for your business?
Understanding which business loan type is best for you, depends entirely on the circumstances of your business. Whether you are just starting up or have been trading for 10+ years, how quickly the funds are needed and how much of a risk you want to take, are all important factors you must consider when looking for business funding.
It is important to take the time to consider all loan types, and what works best for your business. If you need any support or further information on the types of business funding available and what would work best for your plans, Crown Business Finance are the team to go to! Our dedicated account managers have decades of experience, for a range of industries. Each team member is committed to understanding your unique needs and delivering tailored finance solutions that fuels growth.
Crown Business Finance Limited is an independent asset finance brokerage not a lender, as such we can introduce you to a wide range of finance providers depending on your requirements and circumstances. We are not independent financial advisors and so are unable to provide you with independent financial advice. Crown Business Finance Limited will receive payment(s) in the form of commission from the finance provider if you decide to enter into an agreement with them. We work with both discretionary and non-discretionary commission models. Commission payments are factored into the interest rate you pay.
Crown Business Finance Limited is an Appointed Representative of AFS Compliance Limited which is Authorised and Regulated by the Financial Conduct Authority FRN: 625035
Crown Business Finance Limited aims to provide our customers with the highest standards of service. If our service fails to meet your requirements and you would like to report a complaint; please click on the link below: Complaints – AFS
All calls to and from our office phone number are recorded for training, monitoring, and regulatory purposes. This is to ensure we maintain high-quality service standards and comply with applicable regulations. By contacting us, you consent to the recording of calls.
Crown Business Finance Limited
Crown House, 14 Davy Ave, Milton Keynes, MK5 8PL
Company number: 12091513
VAT Number: GB328814584
ICO Number: ZA534022
© 2025Crown Business Finance - All Rights Reserved