When you or your business apply for and obtain a loan, it will fall broadly into one of two classes: secured or unsecured. The distinction is important and it can make your borrowing decisions a lot easier to understand ahead of time. Here’s a brief synopsis:

Secured Loans: The Basic Information

Secured loans are a form of financing that is guaranteed, protecting the lender from default by real assets, cash, or securities. This tangible protection is known as collateral. Unsecured loans are granted with any collateral.

There are pros and cons for both types. If a secured loan is large, quite a bit of collateral may be required. A similar-sized unsecured loan requires no upfront collateral at all. On the other hand, an unsecured loan may come with a higher interest rate, because there is no collateral protection for the lender. Secured loans are usually closed more quickly than unsecured loans. They often come with generous repayment periods as well.

Some Popular Types of Secured Loans

Several common loan types are secured. These include:

SBA Loans

These are secured by the Small Business Association, a federal agency that supports American business activity.

Business Lines of Credit

These can be obtained in both secured and unsecured types.

Accounts Receivable Financing

This type of financing is self-secured by outstanding invoices.

Equipment Loans

These are almost always structured as collateralized lending.

If your business has large assets, secured borrowing may be the best avenue to take.

Call Champagne Capital Lending Today

Here at Champagne Capital Lending we are all about getting the right financing that your business needs. If you would like to explore any additional questions about secured loans, or need a different form of financing altogether, we’d love to hear from you today.