When you take out a secured business loan, you offer collateral to the lender such as real estate, vehicles or machinery. If your business stops making payments, the lender has the right to take the assets that were pledged as collateral. When you take out an unsecured loan, there is no collateral. Instead, the lender will base the loan terms mainly on your credit history, income and cash flow projections. Both types of loans are popular with small and medium-sized businesses in Canada.