Secured Business Loan is a type of funding that is offered against personal guarantee or by pledging assets as collateral. Unlike unsecured business loans, secured loans require security to be deposited to acquire funds from financial institutions like banks and NBFCs. Assets like property, land and equipment are to be provided as collateral in case of default by any borrower.
Customers assure lenders that the borrowed money shall be returned on time, in form of EMIs and if not able to return the loan amount, then lender has the full authority to take the deposited security or items kept as collateral from the borrower. Interest rate offered by secured business loan is lower and affordable, as compared to unsecured loans. Even the repayment tenure offered by lender is longer, as collateral is pledged with the lender.