Secured loans are loans secured by an asset such as a vehicle, equipment, or property. The asset will be subject to a formal charge, restriction, or other security document, which may affect your ability to deal freely with the asset – for example, you might not be able to sell the asset without the lender’s prior consent. In the event that a loan payment is not made, the lender may be able to recoup the amount that is owed directly by enforcing its security against the asset.

An unsecured loan does not require any assets as security. Lenders typically base their funding decision on an assessment of the creditworthiness of your business and the affordability of your monthly payments. Depending on the outcome of this assessment, the lender may still require a personal guarantee from the directors or shareholders. In this case, the individual is promising to make payments to the lender in support of their business, but no formal security will be registered against either the business’s or the individual’s assets, which means you may deal with both freely.

The majority of the business loans arranged by Geared are unsecured. In some cases, a lender may require formal security. This will depend on the particular circumstances and requirements of the individual business and is determined on a case-by-case basis.