Why Secured Loans Are Making a Comeback in 2025
The Return of the Collateral Era
In a time when digital lending, instant approvals, and unsecured credit were dominating conversations, few expected secured loans to regain the spotlight. But here we are in 2025 — and the tide is shifting. Across India, more businesses and individuals are turning back to secured loans as their preferred funding option.
So, what changed? Why is this traditional lending method, once considered slow and documentation-heavy, suddenly becoming relevant again? Let’s break it down.
What Is a Secured Loan — and Why Did It Fade?
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A secured loan is a type of credit where you pledge collateral — like property, machinery, or investments — to borrow money. In return, you usually get:
- Lower interest rates
- Higher loan amounts
- Longer repayment tenure
In the last decade, unsecured loans gained popularity due to quicker processing and less paperwork. Startups and small businesses wanted fast money, and fintech lenders delivered. But that convenience came with higher interest, shorter repayment cycles, and stricter eligibility.
By 2023–2024, many businesses started to feel the pinch — and that’s when secured loans began quietly making a comeback.
Top Reasons Why Secured Loans Are Trending Again in 2025
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1. High Interest Rates on Unsecured Loans Are Forcing a Shift
The average unsecured business loan interest rate now ranges from 15% to 18%, while secured loans hover between 9% to 11%. With profit margins already tight, SMEs are realizing that a secured loan simply makes better financial sense — especially for large funding needs.
2. Banks Are Preferring Collateral-Backed Lending Again
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Post-pandemic NPAs made banks more cautious. In 2025, most NBFCs and banks are showing a clear preference toward collateralized lending. Why? It reduces their risk and increases loan approval chances.
If you have property, equipment, or even investments to pledge — you’re more likely to get approved.
3. SMEs Need Bigger Loan Amounts for Scaling
Unsecured credit limits usually cap out at ₹50 lakhs. But what about a growing SME needing ₹2–3 crores for expansion?
That’s where secured loans win. A loan against property or secured working capital loan can offer bigger tickets without equity dilution — making it ideal for those who want to scale without investors.
4. Longer Tenure Means Lower EMI Pressure
A major reason why small businesses prefer secured loans in 2025? The repayment flexibility.
Where unsecured loans max out at 3 years, secured loans can go up to 10–15 years — especially in the case of loan against property (LAP). This lowers EMI burden and keeps cash flow healthy.
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5. NBFCs & Loan Aggregators Are Offering Faster Processing
The old fear with secured loans was this: “Too much documentation. Too slow.”
But in 2025, NBFCs and consultancies like NKB Kredit have cracked that challenge. From property evaluation to bank tie-ups, they now make secured loan disbursal smoother, faster, and more transparent — often within 5–10 days.
So the process isn’t as old-school as people think. It’s just smarter.
When Should You Consider a Secured Loan in 2025?
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Ask yourself:
- Do you have an asset to pledge (property, equipment, etc.)?
- Are you looking for more than ₹50 lakhs?
- Do you want lower interest and longer repayment?
- Are you planning business expansion or need funds for working capital?
If you said “yes” to two or more of the above, a secured loan is likely your best option in 2025.
Expert Tip: Secured Doesn’t Mean Risky
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One misconception is that secured loans are risky because you might “lose your asset.” But in reality, as long as you plan repayment, secured loans are safer, cheaper, and more predictable.
You’re simply using an existing asset to unlock capital — without giving away equity, or paying sky-high interest.
A Word from NKB Kredit
At NKB Kredit, we’ve seen this shift firsthand. In the last 6 months, the majority of loan queries we receive are for secured business loans, loans against property, and machinery loans.
Our role is to help SMEs get the right loan by:
- Evaluating the best lenders
- Structuring documentation
- Speeding up approvals
- Ensuring fair interest rates
If you’re confused between secured and unsecured, or don’t know where to begin — let’s talk.
Final Thoughts: The Comeback Is Real — And Strategic
Secured loans aren’t just “back in trend” — they’re smart financial tools for ambitious businesses in 2025. If you’re looking to raise funds without losing control or overpaying in interest, now’s the time to rethink secured credit.
And with the right partner — like NKB Kredit — the journey becomes simple, quick, and growth-focused.
Frequently Asked Questions (FAQs)
Yes, in many cases, you can still avail of a loan against property if there’s enough equity left.
Yes, as long as you have collateral and basic financials, many NBFCs offer secured business loans even to new firms.
It helps — but it’s not a dealbreaker if your collateral value is strong and your documentation is clean.