Separate the borrower, security and guarantee
| Term | What to identify |
|---|---|
| Borrower | The person or entity responsible for the loan. |
| Security over a named asset | The specified vehicle, machine, property or other asset covered by the agreement. |
| General business security | Any broader business assets and obligations covered by a security agreement. Read its scope rather than relying on the product name. |
| Personal guarantee | A separate commitment by a guarantor in support of the borrower’s obligations. Identify what it covers and obtain advice on the actual wording. |
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Compare the written proposals
| Question | Secured proposal | Proposal described as unsecured |
|---|---|---|
| Which security is specified? | Identify each asset and the obligations it supports. | Check whether any general business security is included even if no individual asset is named in the product description. |
| Is a personal guarantee required? | Possible; identify the guarantor and terms. | Possible; the unsecured label does not answer this. |
| Can the asset be sold or financed elsewhere? | Check consent and release requirements. | Check the effect of any security and contractual restrictions. |
| What are the payment obligations? | Record all payments, fees and final amounts. | Record all payments, fees and final amounts. |
| What determines price and approval? | The provider’s assessment and written proposal. | The provider’s assessment and written proposal. |
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Two examples of questions behind the label
These fictional summaries illustrate how to read a proposal. They do not describe an Atlas product or establish the legal effect of any agreement.
| Hypothetical summary | What needs checking |
|---|---|
| A company buys a machine with a loan secured over that machine; a director guarantee is also requested. | Check both the machine security and the director’s separate guarantee. The asset’s value does not describe the full guarantee obligation. |
| A company is offered a product called unsecured, with a director guarantee and a document referring to general business security. | Ask the provider to explain the apparent difference between the label and the documents. Identify the assets and obligations covered before comparing the proposal. |
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What security changes
List the assets covered by the security and the obligations they support. Check whether selling an asset, refinancing or using it for another facility requires consent. Ask how the security is released when the relevant debt is settled.
For an unsecured proposal, still identify the borrower and any guarantors. Read any general business security separately from a guarantee or security over one named asset. The obligation to repay remains; the documents explain whose assets and commitments are involved.
How to make the comparison useful
Compare offers for the same amount and purpose, then look at the repayment schedule, total cost, fees and obligations. Consider whether you want or need to keep an asset available for another part of your business plan.
If financing a specific machine or vehicle, an asset-finance discussion may be more relevant than comparing only general-purpose secured and unsecured term loans.
Common questions
Is secured lending always cheaper?
Security can influence pricing, but the actual rate and costs depend on the proposal and provider. Compare written terms.
Does unsecured mean no credit assessment?
No. The provider still assesses the application under its requirements.
Does unsecured mean a director has no personal obligation?
No such conclusion can be drawn from the label. Identify the borrower and read any guarantee and security documents separately. Obtain advice on the specific commitments before signing.
General information only. Product terms and availability vary. Check the actual proposal and obtain advice appropriate to your circumstances.