You are interested in building or buying a business – and you’ve heard that Small Business Administration (SBA) loans are a good idea. But what does all that jargon mean? What are things like “secured vs. unsecured loans” and “personal guarantees”? Find the answers to some of the most frequently asked questions here.
You are working on turning your dream of being a business owner into a reality. Financing is an essential step in the process. To navigate the process, you need some help translating all those financial terms. As an SBA Preferred Lender, we have significant experience helping people like you acquire, grow, and expand your business. This also means we can provide insights into how to interpret those expressions and terminology you’ve heard about business loans.
Here are some frequently asked questions (“FAQs”) about loans, security, and personal guarantees.
What is a secured loan vs an unsecured loan?
Simply put, a secured loan is one where you have agreed to use a tangible asset the lender considers of value as “collateral” against the money you are borrowing. Collateral may be a piece of real estate that you or your business already own, stocks and bonds, or a piece of expensive equipment whose ownership could revert to the bank if you can’t fulfill your contract to repay the loan.
An unsecured loan is one where your creditworthiness has been judged to be sturdy enough to borrow the money without providing something to be held as collateral against the entire debt. Your commitment in writing to pay the debt as agreed by you and the lender is all that is being asked. Read more >
