Secured business loans use collateral (equipment, real estate, inventory, accounts receivable) to back the loan. They offer lower rates (typically 4% to 12%) and higher loan amounts. Unsecured loans require no collateral but charge higher rates (8% to 35%) and typically max out at $250,000. If you have business assets to pledge, secured loans almost always cost less over the loan term.
| Feature | Secured Loan | Unsecured Loan |
|---|---|---|
| Collateral required | Yes | No |
| Typical APR | 4% to 12% | 8% to 35% |
| Max loan amount | Up to $5M | Up to $250K typical |
| Approval rate | Higher | Lower |
| Personal guarantee | Sometimes required | Almost always required |
| Risk if you default | Lose the collateral | Personal credit damage, lawsuits |
| Best for | Established businesses with assets | New businesses, fast funding |
Sources: lender published rate tables and policy documents as of June 2026. Rates and qualification criteria change frequently. Confirm with each lender before applying.
Many comparison articles push unsecured loans because they pay higher affiliate fees. Secured loan products often pay nothing because they're handled through traditional banks. We show both options and the math on which costs less for your specific situation.
Whether to pledge collateral depends on your specific assets and risk tolerance. Compare both secured and unsecured options side by side before committing, because the right answer depends on what you own and how much risk you can carry.
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