Secured vs. Unsecured Business Loans

See how Headway Capital can help you get the right financing fit for your business.

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We’re currently accepting new customer applications. Applying will not impact your credit score.

Applying will not impact your credit score.1

*This business loan calculator assumes a monthly interest rate of 3.3% and a 2% draw fee. Your interest rate and credit limit may vary based on your application. No draw fee in CO, GA, IN, NJ and OK.

Secured Business Loans

When business owners look for small business loans, one of the first decisions they’ll make is whether a secured loan is a better option for them than an unsecured loan. Understanding the differences will allow you to find the type of funding that is best for your business.

Secured business loans are loans that are “secured” by some asset (e.g. equipment or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan. Unsecured business loans are not protected by any collateral. If you default on the loan, the lender can't automatically take your property.

Collateral for Secured Business Loans

Any kind of collateral needed to secure a loan must be something of significant value. The small business lender will be looking for the borrower to provide an asset with enough monetary value to recoup any losses should the loan go into default. Borrowers can offer a number of different assets up as collateral for a secured small business loan. The following are some of the most common options:


Real estate assets


Unpaid invoices


Auto title

Stocks and other investments

Blanket lien

It's important to remember that using collateral to secure a loan creates a risk of losing that asset. If default happens, the lender can seize the asset and sell it to make up their losses. The lender can also seek further monetary recompense if the asset does not cover all of the outstanding debt. This is why it's essential to consider all your loan options, both secured and unsecured.

Secured Business Loans vs. Unsecured Business Loans

Secured Business Loans
Unsecured Business Loans


Collateral is required with a secured business loan.


Unsecured loans do not require any collateral or security from the borrower.
Interests, Terms & Amount

Interests, Terms & Amount

Typically longer-term and often with lower interest. Amount of loan depends on the value of the collateral.

Interests, Terms & Amount

Typically shorter-term or revolving (such as a line of credit). Rarely exceed $50,000, but can be open-ended if a line of credit.


Better odds of approval as the collateral makes the loan much less risky for the lender.


Odds of approval depend on application details.
Funding Speed

Funding Speed

Requires an appraisal of the assets used to secure the funding, which can take several days or weeks.

Funding Speed

Can skip the appraisal process and often fund within a few business days.

Headway Capital Business Loans

Headway Capital offers qualified customers business lines of credit up to $100,000. Our online application is simple to fill out and you could receive your funds within one business day of approval. Plus, there's no need to reapply when you need extra funds. As you pay back your outstanding balance, that credit becomes available to draw.

Credit Line

Up to

Loan Type

Business line of credit

Repayment Term

12, 18 or 24 months

No Hidden Fees

See our Rates & Terms for details

Payment Frequency

Weekly or monthly

Clear Cost

Clear payment terms, interest does not compound, no penalty for early payoff

1We always do a soft inquiry unless your credit file is restricted, in which case we would ask you to contact the credit bureau to lift the restriction. Doing so may result in a hard pull.