Are Shop Loans Secured or Unsecured?

A shop loan is a type of business loan provided by banks and Non-Banking Financial Companies (NBFCs) to shop owners to meet their working capital needs. Shop loans can either be secured or unsecured.

Most shop loans are secured, meaning you need to pledge an asset (like your shop property) as collateral. This collateral acts as security for the loan. If you default on the loan, the lender can seize the collateral to recover their money.

However, some lenders offer unsecured shop loans, which do not require collateral. Instead, these loans are based on your creditworthiness and ability to repay. It is important to remember that unsecured loans usually come with higher interest rates and lower loan amounts, and they may have stricter eligibility criteria.

In summary, while many shop loans are secured with collateral, unsecured options are also available but may be harder to obtain and come with higher costs.