The collateralization of the loan allows a lower interest rate than without it, because by collateralizing, the asset owner agrees to allow the forced sale (foreclosure) of the asset to pay back the loan.
The risk to the lender is reduced so the interest rate offered is lower.
Debt consolidation can simply be from a number of unsecured loans into another unsecured loan, but often it involves a secured loan against an asset that serves as collateral, most commonly a house.
In this case, a mortgage is secured against the house.
Remember, the choice you make today will affect your credit rating now and in the future.
A secured business debt consolidation loan may offer a lower interest rate and therefore seem more appealing than an unsecured loan.
But if your business is in serious trouble, that reduced rate may not be worthwhile.
If your business were to default on the secured consolidation loan and go bankrupt, you could risk losing your home as well as your business.
As unexpected challenges arise in business, dealing with out-of-control debt can be a scary process.