Published on 24 September 2025

Posted in Uncategorised

Secured vs Unsecured Business Funding, Which Is Better For You?

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. 

Secured Business Loans

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. 

Unsecured Business Loans

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. 

Contact us today! 

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