American Finasco > Blog > Secured Versus Unsecured

Are you a small business owner in search of financing? Remember, loans and other financing methods fall under two main categories: secured and unsecured debt. And it is important to know the difference between the two.


Lenders issue these funds to borrowers based on a promise to repay and creditworthiness. This is how a lender will determine the likelihood you will default on your debt obligations. Your credit worthiness is what creditors look to before any new credit is approved. This is determined by factors including your credit history and score. If you are interested in this type of loan, be mindful. Banks charge a higher interest rate on these loans. Because the risk to the lender is increased relative to that of secured debt, interest rates on unsecured debt tend to be much higher.

Unsecured debt has no collateral backing. As it implies, it requires no security.  This is particularly risky for lenders because the borrower might default on the loan through bankruptcy. For the borrower, this is not without consequences. Borrowers who have declared bankruptcy in the past may find it difficult or even impossible to secure new loans in the future.

Pros and Cons of Unsecured Loans

Unsecured business loans pros:

  • A shorter loan application process
  • No collateral required
  • You do not risk losing any collateral

Cons of a unsecured business loan:

  • High interest rates
  • More difficult to qualify for
  • Smaller loan amounts


Secured debt means that some asset is held as a security, interest or collateral by the lender. The borrower makes a promise to repay and puts up some asset or collateral against the loan. The collateral for a secured business debt could be a vehicle, property, buildings, equipment, furniture or even inventory. If a business defaults on the debt or fails to make payments, the creditor has the right to repossess the collateral.

These loans carry low risk since the borrower has so much more to lose if payments are not made. In turn, this type of loan carries less risk for the lender and interest rates are usually lower for a secured loan.

Pros and Cons of Secured Loans

Secured loans usually offer these benefits:

  • Lower interest rates
  • Higher borrowing limits
  • Longer repayment terms


  • You must provide valuable assets to secure the loan
  • Risk loss of the provided collateral if you default on the loan

Private Mortgage Financing Partners, LLC

Private Mortgage Financing Partners, LLC is a commercial lender who charges lower rates than unsecured cash advance lenders.  They do require a first lien on commercial real estate as collateral and can fund within a few days of receiving the appraisal.  While it is not quite as fast as a cash advance lender, it is faster than the traditional loan process.  The biggest benefit is that the interest rate charged is usually less than half of what a cash advance lender charges which means your monthly payment to Private Mortgage Financing Partners, LLC would be less than half your payment to an unsecured cash advance lender. To request a loan now, fill out their Loan Application form.

Are you looking to reduce your business debt before applying for another loan? American Finasco has several options to reduce your commercial debt which allows you to stay focused on your business. We provide strategies and take the pressure off business owners who are having a hard time managing their debt. The first step when dealing with creditors is a phone call to American Finasco. We provide our clients effective solutions for business debt relief. Contact us today to get your business on the right track! Visit Contact Us and complete our Online Form for a free consultation or call (800) 299-2909. We look forward to speaking with you.