The Differences Between Unsecured And Secured Business Loans In CA

If you are like most companies, you will need a loan at some point, whether you are expanding the company, need extra supplies or run into a small hardship. However, when choosing which option will work best for you, you may not understand that there are pros and cons of using both secured and unsecured business loans in CA, and you’ll want to know about each option to help make your decision.

Secure Pros

Secured options mean that you are promising to give something else if you cannot or will not pay back the loan. Collateral can be anything, but in most cases, businesses can use cars, homes, inventory, equipment and accounts receivable. Because of the use of collateral, interest rates are usually lower and easier to obtain because it is less of a risk (the lender will get something back, even if not their money). In some cases, a lower credit score can still get you this type of loan because you are using collateral.

Secure Cons

Even though the secured loan could be more helpful, you stand to lose whatever you put up as collateral, so it is important that you be willing to lose those items. For example, if you put your house up as collateral and can’t pay the loan, they can seize your house and sell it as part of the repayment. You may also get less for the collateral because the lender has to sell it at lower prices to get payment quickly, so you could still owe quite a bit on the loan.

Unsecure Pros

An unsecure loan doesn’t offer the lender any extra security and no collateral is necessary. This means that if you default, they cannot take something you prize, though they could still require you to sell or give them some of your stuff to pay it off, especially if it goes to court.

Unsecure Cons

Because there is no collateral, the lender takes a greater risk and will likely require you to have an excellent credit score and history. However, if you have a low score, that doesn’t necessarily stop you from getting a loan, but may cause your interest rates to be higher. You must be in business for two years or more before applying for unsecured business loans in CA, so it isn’t the best option for new businesses.

Unsecured business loans in CA could be the option you are looking for, but it’s important to know about both. Visit Biz4Loans today to find out how they can help you or contact at

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