What is the difference between secured and

2 min read

Asset backedSecured

No collateralUnsecured

Cost vs riskThe trade-off

How they differ

Secured borrowing is backed by collateral — property, equipment or a charge over company assets — which the lender can take if you default. Unsecured borrowing pledges no specific asset, so approval rests on trading strength and affordability. Secured usually carries a lower rate because the lender's risk is lower; unsecured is faster and simpler because there is no asset to value.

What this means for your company

Secured makes sense for large sums against a clear asset; the risk is that the asset is on the line. Unsecured suits smaller, faster needs where you'd rather not encumber anything — but watch whether a personal guarantee is bundled in, which is a back-door form of security. Credicorp's core lending is unsecured with no personal guarantee. Compare the two on cost with the true-cost calculator.

What it means for you

Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.

Frequently asked questions

Is secured borrowing always cheaper?

Usually the rate is lower because the lender's risk is reduced by collateral. But 'cheaper' ignores the risk to the asset. Weigh the rate saving against what you could lose, and check for a personal guarantee on unsecured deals.

Does unsecured borrowing mean no risk to me?

Only if there is also no personal guarantee. Unsecured means no specific asset is pledged, but a personal guarantee can still expose your personal finances. Confirm both are absent for genuine protection.