Secured vs. unsecured fast business loans

Key takeaways

  • Secured fast business loans require collateral

  • Unsecured fast business loans can often be funded faster than secured fast business loans

  • Secured fast business loans are a good fit for businesses facing difficulty getting approved for unsecured funding

Fast business loans prioritize speed of funding. When you apply with the right lender, you can often get funding from a fast business loan as soon as the next day.

These loans can come in both secured and unsecured forms. There are benefits and advantages to each that can help you decide the right one for you.

Secured vs. unsecured fast business loans

Fast secured loans require collateral. To get this type of loan, you must provide an asset of value to secure the loan. If you fail to make payments, the lender can take the collateral to cover its losses. That helps reduce the lender’s risk.

Fast unsecured loans have no collateral requirements. You can apply even if your company has no assets to offer to secure the debt. But, these loans may have higher rates and strict lending requirements compared to secured loans.

Term loans and business lines of credit can be both secured and unsecured. Some loans, like equipment financing and invoice financing, are secured. And some, like invoice factoring or merchant cash advances, are almost always unsecured.

Compare secured fast business loans

If you’re looking for a fast secured business loan, consider these lenders.

Lender

Loan type

Funding speed

Best features

Funding Circle

  • Term loan

  • Line of credit

Two days

  • One quick application that shows what loans you’re eligible for

  • Low rates and fees

SMB Compass

  • Line of credit

  • Equipment loan

  • Bridge loan

24 to 48 hours for most types of loans

  • Wide variety of loan options

  • Low starting rates

  • High loan amounts

National Funding

  • Term loan

  • Equipment loan

As soon as 24 hours

  • Lowest payment guarantee

  • Early payoff discount

Lendio

Equipment loan

Next business day

  • Shows offers from large network of lenders

Compare unsecured fast business loans

Consider these options if you’re looking for an unsecured loan with quick funding.

Lender

Loan type

Funding speed

Best features

OnDeck

Line of credit

Same-day

  • Early payment discount

  • Low credit score requirements

Fundbox

Line of credit

Next business day

  • Low credit score requirements

  • No early repayment penalty

Credibly

Merchant cash advance

Same-day

  • Minimal eligibility requirements

  • Variety of loans available

Backd

Working capital loan

Next business day

  • Generous loan amounts

  • Low annual revenue requirements

Lightbulb

Bankrate insight

The best business credit cards are often unsecured and don’t require collateral. This is a great alternative to a fast business loan because it offers easy access to funds while potentially earning rewards and building credit. But you will likely need to provide a personal guarantee.

When to take out a fast secured business loan

Secured fast business loans are a great fit for businesses needing quick funds and have assets to provide as collateral. Since there is less risk involved, lenders tend to offer the most affordable rates and terms for these loans.

Secured term loans and business lines of credit are also more accessible than unsecured loans. So, if you are a startup or a business owner with fair-to-bad credit, a secured loan can help you secure affordable financing.

Lightbulb

Bankrate insight

Since fast business loans often require daily or weekly payments, you run the risk of defaulting if you can’t afford your payments. It is recommended to use a business loan calculator to determine the cost of the loan and compare fast business loan options to find the best one for you.

When to take out a fast unsecured business loan

Unsecured fast business loans typically have quicker application processes than secured loans because the lender doesn’t have to examine the collateral to assess its value. If you need money quickly, skipping the collateral may speed up the process.

An unsecured loan can also be a good choice if you plan to pay the loan off quickly. The extra effort of offering collateral to lower the interest rate on a secured loan won’t save you much if the loan only lasts a few months.

Additionally, you may want to consider an unsecured business loan if you have good credit and high annual revenue, as you’re likely to get decent terms without securing the loan with assets.

Lightbulb

Bankrate insight

Borrowers with good credit and high annual revenue may qualify for better terms with another type of loan, but you’ll likely lose the quick approval and funding that a fast business loan offers.

Bottom line

If you need funds quickly, both secured and unsecured fast business loans are worth considering, regardless of your business’s credit profile. Though secured loans require you to put your business’s assets at risk, doing so can be worth it if you save money through lower rates and fees.

Unsecured loans may come with higher interest rates, but they open up funding for companies who lack the assets for a secured loan. Before signing a loan agreement, be sure to weigh the pros and cons of each loan type to determine which is best for your business.

Frequently asked questions

  • Do business loans need to be secured?No, not all business loans need to be secured. If your company has strong financials, good credit, and a long operating history, that can help it qualify for unsecured loans. But some lenders may ask for a personal guarantee on your business loan in place of collateral.

  • How do I get a secured or unsecured business loan?Whether you want a secured or unsecured loan, the process starts the same: you’ll have to find a lender and fill out an application. Both loan types require similar info, such as your company’s financial documents, credit score, personal information and business plans. When applying for a secured loan, you’ll need to provide details about the proposed collateral.

  • What is the quickest way to get a business loanThe quickest way to get a business loan is to have a complete and accurate application with the required documentation. Applying through an online lender with a streamlined process can also speed up approval and funding.

Advertisement