Business loans, as the name indicates, are obtained for starting, running and expanding your business. There are many categories of loans categorized among business loans but basically they fall in either of these two categories:
1. Secured Loans
In case you wish to seek secured loan, you need to provide some kind of a security to the lender to ensure that the latter gets back their money. This security is commonly referred to as collateral. Collateral is most often in the form of your assets like your home or real estate. The worth of collateral varies with the amount and duration for which you want to borrow funds. The borrower pledges his assets to the lender, who gets a right to dispose of the collateral to recover his money, should be borrower fail to give the borrowed amount back.
Here are the types of secured loan
Mortgage Loans: The collateral in their case is the applicant’s property, like a house.
Non-recourse loan: The only security or claim the lender has against the borrower is the collateral. It is so named as the creditor has no option or provision against the borrower other than the collateral. But, this is only after ‘foreclosure’ by the borrower.