On this page
What security means in business lending
Secured business lending is backed by something the business owns. Unsecured lending is not, and it is priced accordingly. Both are decided the same way at the first gate: monthly revenue, how long you have been trading, and whether cash flow carries the payment. Security changes the price and the size, not the questions. The business loans market runs both.
Two pieces of paper matter more than most guides admit. A general security agreement, or GSA, gives the lender a claim over the business's assets as a class rather than one named machine, and it is standard on term lending. A personal guarantee makes you personally liable if the business cannot pay, and it is standard on almost all small-business lending including the unsecured kind. So unsecured does not mean nothing is at risk. It means the business assets are not pledged; you usually still are.
What lenders take as collateral
- Equipment and vehicles. The cleanest security, because the asset has a resale value the lender can estimate. Often financed as its own product.
- Accounts receivable. Either pledged against a facility or sold outright through invoice factoring, where your customers' creditworthiness matters more than yours.
- Inventory. Accepted at a discount, because forced-sale values are low and stock can date.
- A general security agreement over the business. Broad rather than specific, and the most common form on term loans.
- Real property. The lowest rates and the slowest process, arranged as commercial mortgage lending rather than a business loan.
Secured and unsecured compared
| Secured | Unsecured | |
|---|---|---|
| Speed | Weeks, the asset is valued and registered | Days, sometimes same day |
| Cost shape | Interest, much lower | Interest or a factor rate, higher |
| Typical size | Larger, scaled to the asset | Smaller, scaled to revenue |
| Revenue bar | Similar, but the asset can offset a thinner file | Around $10,000 a month at most online lenders |
| Time in business | Often 12 months or more | 6 months is common |
| Personal guarantee | Usually still required | Almost always required |
Size the ask before you choose a side. Across Smarter Loans business loan applications from August 2025 to July 2026, the average request was $92,806, which sits at the level where both routes are genuinely available and the choice is real.
What the security is worth
$100,000 over 36 months: secured against unsecured
| Route | Monthly payment | Months to clear | Total interest |
| Secured | $3,320.95 a month | 36 months | $19,554.32 interest (11.99%) |
| Unsecured | $3,975.45 a month | 36 months | $43,116.33 interest (24.99%) |
The security is worth the difference, and since the unsecured version almost certainly carries a personal guarantee anyway, the honest comparison is between pledging a business asset and pledging yourself.
Illustrative example, not quoted offers: $100,000 over 36 months at the rates shown. Your rate depends on revenue, time in business, the asset and the lender.
Which fits your stage
Under a year of trading, unsecured revenue-based lending is often the only door open, and equipment financing is the exception because the machine secures itself. Past a year with steady deposits, both routes are available and the question becomes whether you have an asset worth pledging and time to wait. Past two years with statements, bank and government-backed secured lending becomes reachable, and that is where the cheapest money in the market lives.
One practical rule: do not pledge an asset the business cannot operate without unless the saving is large and the payment is comfortable. A machine that earns the revenue that repays the loan is a poor thing to lose.
What it can legally cost
Security changes the price a lender offers. It does not change the ceiling the law sets.
If you borrow as a sole proprietor you are a natural person in law, and the 35 percent criminal interest rate cap protects you the same way it protects any personal borrower. If you borrow through a corporation, that protection narrows. Business borrowing by an incorporated company between $10,000 and $500,000 can legally reach 48 percent APR, and above $500,000 there is no legal ceiling at all. None of that means your lender will charge it, and most will not. It means the law stops holding the line where you might assume it does, so the APR in your own agreement is the number that matters.
What happens on default
On secured lending the lender enforces against the pledged asset, sells it, applies the proceeds and pursues you for any shortfall. Under a general security agreement that can extend across the business's assets rather than one item. On unsecured lending the lender pursues the business and then, under the guarantee, you personally. Both routes report to business credit and, where a guarantee is called, to your personal file.
Speak to the lender before a payment fails. Restructuring is common and cheap compared with enforcement, and lenders prefer it.
| Lender | Amount | Rate | Revenue needed | Time in business | |
|---|---|---|---|---|---|
| CanaCap | $5,000 to $500,000 | 1.1 to 1.5% factor rate | $10,000 a month | 6 months | See if you qualify |
| BizFund | $5,000 to $500,000 | 1.1 to 1.5% factor rate | $15,000 a month | 6 months | See if you qualify |
| Bizcap | $5,000 to $5,000,000 | 9.99% APR | $20,000 a month | 12 months | See if you qualify |
| KM Capital | $5,000 to $500,000 | 9.99% APR | $10,000 a month | 6 months | See if you qualify |
| Breeze Capital | $10,000 to $1,500,000 | 7.99% APR | $10,000 a month | 6 months | See if you qualify |
One application matches your revenue and time in business against every business lender we list.
Frequently asked questions
Is an unsecured business loan really unsecured?
The business assets are not pledged, but almost all small-business lending carries a personal guarantee, so you are usually still on the hook personally. Ask for the guarantee terms in writing before you sign, because that is the part that follows you.
How much cheaper is a secured business loan?
Substantially, and the gap widens with size and term. The trade is time: valuation and registration take weeks that unsecured lending does not. On a large or long facility the saving usually justifies the wait; on a small short one it rarely does.
Can a new business get a secured loan?
Equipment financing yes, because the equipment itself is the security and the lender can value it without a trading history. Broader secured facilities generally want a year or more of statements, whatever assets you hold.
Sources
- Canada Gazette, SOR/2024-114, for the business exemption to the criminal interest rate. Verified 2 September 2026.
- Smarter Loans business loan applications, August 2025 to July 2026, for the request figure.
Related reading: how to qualify for a business loan and business loans with bad credit.
Written by:
The Smarter Loans Editorial Team produces in-depth, original content to help Canadians navigate borrowing, credit, and personal finance with confidence.
