When looking for a loan, it can be stressful to find the right one for your business. However, it is paramount you conduct enough research to ensure you are giving your business the best possible chance at success. Here, we are going to look at the difference between secured and unsecured loan rates and how these can have an effect on your business.

When opting for a loan, it is important to consider every aspect of the loan before making a commitment. When opting for a secured loan, it is important to be aware of the interest rate, and the security the lender may require. Interest rates on a secured loan are kept secure by your collateral and will not change over the time of your borrowing. This is ideal for a business loan, as this means the interest rate will not increase based on variables such as business earning per annum and overall assets.

A business loan set on secured loan rates is also the perfect solution for smaller businesses at it allows them to finance accordingly. You will be offered security before taking out the loan, which covers the business should the worst happen. This will then be taken to clear the debt. Secured loan rates are the perfect solution to this as this will ensure you are paying one fixed price throughout the course of the loan to ensure that you have the budget needed to pay for these elements.

When opting for a secured loan, you will be required to undergo a check of your credit score as well as your business as a whole. This will then allow the lender to make an informed decision as to whether or not you will be approved. Here at think business, we offer you a wide range of loans for you to choose from so that you can get the funding required within a suitable timeframe.

Unsecured Loan Rates

On the other hand, unsecured loan rates are far more temperamental. This is partly down to the higher level of risk that is placed on the lender, as well as the amount of money that you can borrow with an unsecured loan. Due to it being unsecured and with no level of security, there is a higher interest rate. Inflation is one of the reasons that interest rates tend to change. Unlike secured loan rates which are fixed at a set price, inflation has a profound effect on the interest rate that you will see.

Although this may only be an increase of 2%, this can still have an effect on the amount you are paying per month. This can be a risk for smaller businesses as they may not see a constant stream of revenue on a yearly basis.

Why Do Loan Rates Differ?

Loans can differ for a multitude of reasons, whether this is the credit score of the business or through inflation at the time of the application, this can all be a contributing factor to an increase in loan rates. Another reason for a sudden change in interest rates is in part down to the number of people that are applying for loans. If there’s a limited number of people that are applying for loans, then lenders lower the interest rate in order to lure people back to applying for loans. However, if there are more people applying for loans, the lenders increase their interest rates due to the volume of people applying for loans. This is very similar to the tactics used in retail to drive sales and also reflects the same results.

A prime example of results differing is from the panel of over 200 lenders that we have. Below we have a table that is showcasing all the elements and the different interest rates.


Interest Rate

Unsecured Business Loan 4.9%
Secured Business Loan 1.87%
Bridging Loans *Per Month 0.49%
Asset Finance Loans 2.38%
Flexible Facility Business Loan *Per Month 1.1%


With all this in mind, there are a number of pros and cons for the different types of Loan rates that you can find, each of which will be different when applying for your selected type of loan. For more information, feel free to contact us to discover which interest rate is the right one for you.