Loan Articles

Generally, secured business loans can give a fresh start to budding business people whose heads are brimming over with innovative ideas, but whose pockets are empty. Thanks to the ‘generosity’ of some banks including the ‘big five’ banks in Canada, as well as most of the major banks in the United States, these fellows can now have the chance of their life to put their ideas into practice and cash on their wits. Secured business loans are one option to look at, although it’s worth mentioning that unsecured ones also exist, with the main difference between the two types being that the latter does not require any collateral, while the former does.

As to the ways of applying for a secured business loan, you can do that at the nearest branch of your bank or file an application online. Note that there are hundreds of secured business loans dealers over the Internet; so, you should do some preliminary research before picking up one. One of the major advantages of secured business loans over the unsecured ones is that they are easier to obtain.

Your credit score is not as much of a factor, provided that it has not been seriously tarnished, since you have secured the loan with some asset. And since one’s home is considered his or her greatest asset, it logically follows that homeowners stand even greater chance of being approved for a secured business loan. Alternatively, if you have already developed some business, you can use the assets of your company such as machinery, production equipment, or real property to secure your business loans.

Another big advantage of the secured business loans is that they could be paid off over as long as thirty years, and some lenders may even allow you to pay off only the interest over the first five years. Also, a secured business loan can bring you more cash, which is important in times of market instability and tough, tooth-and-nail competition. In view of these factors, the good news is that the minimum amount you can draw starts from $30,000 and reaches close to $1,000,000.

No matter how you apply for a secured business loan, one of the most important decisions you should make concerns the interest to be paid. Fixed rate secured business loans give you the peace of mind as you know how much you will be paying off each month throughout the whole period of the loan. On the other hand, floating rate secured business loans allow you to benefit from sudden drops in the basic interest rate of your bank, but they also leave you exposed to nasty interest hikes, should the financial condition of your lender deteriorate over the pay-off period of your loan.

Finally, here is one more thing to keep your eyes open for: do not let your loan become over-secured; in other words, you should carefully weigh the value of the assets you put up as collateral, against the amount of cash you get.