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Home Commercial Loan Articles An Unsecured Commercial Loan Versus A Secured Commercial Loan
An Unsecured Commercial Loan Versus A Secured Commercial Loan PDF Print E-mail
There are two types of commercial loans that you can get as a business. The first is a secured commercial loan, and the second is an unsecured commercial loan. A secured commercial loan is a loan that you get with collateral, and therefore is a much easier loan to get as a result. If you have less than excellent credit, you can put your business equipment, mortgage and other items up for collateral and the bank or lender will be more apt to provide you with funding. The reason for this is that they know they can get back their money with the collateral by selling it, so the risk is much lower.

An unsecured commercial loan is one that is not backed by collateral. It is much harder to get and it is based only on the credit rating of yourself and your company. As a result, you are in danger of higher interest rates if you go for an unsecured commercial loan with credit that is not perfect.

In contrast to the higher risk that is put on by the lender, the borrower has lower risk associated with a unsecured commercial loan because if they do not pay back the loan, the only damage is to their credit rating, and even that can be repaired with time. An excellent way to illustrate the difference between a commercial secured loan and an unsecured commercial loan is with an example. If you have a friend, and you borrow money from them and they ask for collateral of your television, then you know that if you don’t pay them back, you lose your television. Your friend has the assurance that even if you don’t pay back the loan, they still get a new television. However, if you borrow from a friend and they don’t ask for collateral, then when you don’t pay back the loan you are out no money (but may have lost a friend).

Typically, an unsecured commercial loan will leave the business responsible for repaying the loan, but there will be a personal guarantee from the owner of the business that there will be a repayment of the loan per the commercial loan terms.

An unsecured commercial business loan is better for a business if they have good credit, but bad for the lender if the business does not pay back the loan. Unless you have perfect credit, you should not try and get an unsecured commercial loan because the interest rates may cause you to default on it down the road.

 
 

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Featured Article

Why Use A Commercial Loan Office Website?

Many business owners choose to go to a commercial loan office website when they are considering purchasing commercial real estate.  A commercial loan office will handle most of the commercial real estate transactions in the area and will be able to provide the business owner with the finding to purchase the properties that the business owner is interested in.  Some commercial loan office websites provide more valuable information than others, such as detailed information about some of the loan products available for purchasing commercial real estate and what the common loan amounts and interest rates are in the area that the business owner is interested in. 

 

When choosing a commercial loan office to help the business owner finance the purchase of commercial real estate, checking out their website may be a good indication of whether the commercial loan office is right for the business owner.  On a typical commercial loan office website, there will be limited information about the commercial loan office. However, the best commercial loan office websites will have information about the experience of the commercial loan office, information about the communities they service, a description of the different loan products that they have available, and multiple methods for the business owner to get into contact with the company to talk about obtaining a commercial real estate loan. 

 

A commercial loan office that includes a great deal of information about the different types of loan products the office has to offer will generally receive much more internet traffic than websites that offer less information about the loans.  Many business owners that are expanding their business for the first time often have no idea of what types of commercial loan products will be available to them.  By having the information about the loan products on the website, the commercial loan office will attract the business owner's interest which makes it more likely that the business owner will choose them to do business with. 

 

One thing that every commercial loan office should place on their website is information about the company and their commercial loan brokers.  Completing a commercial real estate transaction can be a strenuous process and business owners are much more comfortable working with someone completely dedicated to the process when making a large financial decision for their company, such as obtaining a commercial loan.  By including some information about the commercial loan office on the site, the office seem more friendly, which may mean the difference between giving the commercial loan office a call or choosing another business to do business with.