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Secured Loans: are they right for your business?

Published on 31st October 2018 - Last update on 1st July 2020

Every business owner has goals that they strive towards, but not everyone knows how to achieve them. For many, the single greatest obstacle standing in the way of their aspirations is a lack of sufficient capital. Yet, it doesn’t need to be that way for you. Secured Business Loans exist in a variety of forms, providing invaluable financial support wherever it’s required. However, with so much diversity, this can make it difficult to understand the role that Secured Loans play and what they mean for your business. So, to answer the question of whether a Secured Loan is right for your business here’s a rundown of what you need to know.

What are the Pros and Cons of using a Secured Loan?

Secured Loans provide many UK business with a variety of benefits that reinforce your business’ growth and ability to succeed. But in order to make the most of the opportunities available and make the right decision, understanding what a Secured Loan involves is essential.

The Pros and Cons of Secured Loans.

Pros of Secured Loans

Cons of Secured Loans

Secured Loans exist in a variety of forms including Secured Business Loans, Bridging Loans, Mortgages, Factoring, Discounting, Hire Purchase and Asset Refinance.

On account of interest, using a Secured Loan will always cost more than using your own capital.

Secured Loans can be short or long-term agreements, making it easier to spread out the cost of your goals.

Using a Secured Loan means presenting unencumbered assets (equipment, machinery, vehicles, property or capital) as security, putting them at risk of repossession.

Secured Loans can be short or long-term agreements, making it easier to spread out the cost of your goals.

Some Secured Loans may require you to make an upfront down payment.               

Since many Secured Loans impose no usage restrictions, there’s no limit what you can achieve.

The strength of your credit rating will affect how much interest your business is charged, and could potentially lead to a rejection.

Compared to most Unsecured products, Secured Loans often impose less stringent application requirements, though lenders will always carry out the necessary checks.

Although APR is the most common, some Secured Loans used different methods to charge interest, such as interest per day.

Secured Loans tend to charge lower interest rates compared with Unsecured products.

Committing to making repayments places additional strain on your finances, and can make it difficult to budget.

A choice of repayment options is available depending on the type of Secured Loan you use, including Fixed Monthly Repayments and Deferred Payments.

As well as interest, you may be charged additional costs including setup, service and legal fees.

Got an urgent project that needs funding? Able to present collateral? Apply for a Secured Loan or learn more about how your business could benefit.

Are there any alternatives to using a Secured Loan?

Although Secured Loans are a useful way of raising capital in support of a wide range of products and goals, they may not always be appropriate and you could benefit from looking at other finance solutions. Thanks to the rising prominence of the Alternative Finance industry, you could gain access to next-generation business finance solutions, including an array of Unsecured finance agreements, which don’t require the use of collateral. However, in order to source a suitable finance agreement for your business, you need to have a comprehensive understanding of what’s on offer first. This is where speaking to a qualified business finance professional could prove invaluable.

Is a Secured Loan right for your business?

Driving your business forward whilst trying to establish a tangible presence in your sector isn’t easy, and can often be a frustrating endeavour. But if you need additional funds to achieve your goals, perhaps a Secured Loan could offer you the support you require? All you need to do is choose the most suitable product for your business - which is where we can help.

At Rangewell, we’re an Access to Finance specialist and have mapped over 400 lenders to offer you an overview of more than 23,000 business finance products. Our services are free to use and we’ll also guide you through the application process, supporting your journey from start to finish. So if you’re looking to acquire additional capital, apply for a Secured Loan today or find out more with Rangewell.

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David Harrison

David Harrison

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