Banks give secured loans to all people, when a property is kept as a collateral security. In case if the borrower is not able to pay the amount, the loan amount will be recovered by selling the collateral security. Initially they give extra time to pay back the amount. Still, if the borrower is not able to pay the money back, they sell the assets to raise money.
Loans are also given to people who do not have good credit history. In the past, these people would have defaulted any payments or would have made delayed payments. Loans for these type of peoples are called bad credit secured loans and this is very common in United States of America and United Kingdom.
Bad credit history for a person or business establishment, could have happened due to genuine reasons at that point of time. Some reasons might be economic downturn, sudden reduction in prices, change in government policies etc. But this forms a permanent record in banks and other financial institutions. But the promoters and the individuals of the business might be a genuine customer. So these loans are targeted at these genuine people to give them a a second chance.
The borrower should be careful when taking these loans. The interest rates would be very high i.e. even more than twenty percentage and the terms and conditions would be very strict. The repayment methods would be very strict. So before signing the loan contract, the borrower has to check the contract well.