Types of Instant Business Loans


Just like the traditional business loans, instant business loans can be secured and unsecured. Both can be used to finance various business investments but there are several important differences between the two types of instant business loans which should be carefully considered before applying for a loan.

Secured instant business loan requires from the borrower to put an asset as a security against the loan. The asset can be a real estate, equipment, vehicle, land or any other valuable possession that meets a particular equity-debt ratio. It serves as a guarantee that the loan will be repaid according to the terms of the loan documents. In case of defaults, the lender has the right to take the asset that is put against the loan to recover the value of the loan. Due to the higher risk involved for the borrower of a secured loan and the ability to recover the value of the loan through assets, secured business loans typically have relatively low interest rates and lower monthly payments, while the loan itself and its terms are less influenced by the borrower’s credit history than in the case of unsecured instant business loans.

In contrary to secured loans, unsecured loans do not require from the borrower to put an asset as a security against the loan. As a result, the lender has no right to the borrower’s possessions in case the latter fails to repay the loan. The risk is thus taken over by the bank or financial institution that approves the loan application although the borrower is required to provide certain guarantees that he or she will repay the loan. The lender has several instruments to recover the value of the loan in case of defaults, however, this is not an easy job. For that reason banks and financial institutions do not give unsecured instant business loans easily. To have your application for an unsecured instant business loan approved, your business and credit history have to convince the lenders that you will repay the loan. But due to the risk for the lender, unsecured instant business loans are usually approved for smaller sums, while the interest rates are higher than for secured loans.

In addition to secured and unsecured instant business loans, there are also the so-called online instant business loans. However, they are a form rather than type of instant business loans. Like their name suggests, they are obtained online rather than in person at the bank or other financial institution that offer this kind of loans for business owners. There no major differences between online and offline instant business loans as much as the loan itself is concerned. They can be either secured or unsecured, while the interest rates, monthly payments and other terms are virtually the same than for the loans which are obtained the traditional way. Online instant business loans, however, are becoming increasingly popular because online loan applications are responded much faster than offline applications.