# Secured or unsecured business loans: the real difference

What "secured" and "unsecured" actually mean on a Canadian business loan, how each is priced, and why an unsecured loan is rarely as unsecured as it sounds.

Published: 2026-09-26 · Spark

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Every business loan is either secured — backed by something the lender can claim if it is not repaid — or unsecured, backed by the business's ability to pay. The difference affects the price, the size, the speed and what you are putting on the line.

## Secured loans

A secured loan has a specific asset behind it: equipment, vehicles, receivables, inventory, property. The lender registers its interest in that asset, and if the loan is not repaid, it can take the asset to recover what it is owed.

- **Usually cheaper**, because the lender's risk is lower
- **Often larger**, because the size follows the value of the security
- **Slower to arrange**, because the asset has to be documented and sometimes valued
- **The asset is at stake** if repayment fails

Examples: [equipment financing](/capital/equipment-financing), where the machine secures its own loan; [asset-based lending](/capital/asset-based-lending) against receivables and inventory; commercial mortgages.

## Unsecured loans

An unsecured loan has no specific asset pledged. The lender relies on the business's revenue — usually read from its bank statements — and on the owners.

- **Usually more expensive**, because the lender has less to fall back on
- **Often smaller**, sized against deposits rather than assets
- **Faster**, because there is nothing to value
- **No specific asset at risk** — but see below

Examples: many [term loans](/capital/term-loans), [revenue-based lines of credit](/capital/line-of-credit) and [short-term loans](/guides/short-term-business-loans).

## Why "unsecured" rarely means nothing is at stake

Two things often come with an unsecured business loan:

**A personal guarantee.** The owners promise to repay if the company cannot. It is common on both secured and unsecured loans — [personal guarantees explained](/guides/personal-guarantee) covers what to check.

**A general security agreement (GSA).** Many lenders register a general claim over the business's assets, even on a loan that is not secured by any one thing. It is normal, but it matters: it affects what the next lender can take as security. Ask whether one is being registered.

So the practical difference is less "something at stake versus nothing" and more "a specific asset at stake versus the business and your guarantee".

## Which one fits

**Secured usually fits when:**
- You are buying a specific asset, or already own assets that can back the loan
- You need a larger amount than your deposits alone would support
- Lower cost matters more than speed

**Unsecured usually fits when:**
- You need the money quickly
- The business has strong, steady revenue but few hard assets — many service businesses
- The amount is modest relative to your monthly deposits

## Compare on the total

Whether secured or unsecured, compare offers on the total you repay, the payment and the number of payments. [What working capital costs](/guides/what-working-capital-costs) shows how, and the [business loan calculator](/business-loan-calculator) will run the numbers. For the rest of what lenders ask for, see [business loan requirements](/guides/business-loan-requirements).