broken image
broken image
  • Abundance
  • Business Specialists 
    • Business Specialists
    • Articles
  • Choosing the Right Loan 
    • Choosing the Right Loan
    • Construction Loans
    • Asset Finance
    • Refinancing
    • Line of Credit
    • ATO Tax Debt
    • Debtor Finance
    • Business Overdrafts
  • …  
    • Abundance
    • Business Specialists 
      • Business Specialists
      • Articles
    • Choosing the Right Loan 
      • Choosing the Right Loan
      • Construction Loans
      • Asset Finance
      • Refinancing
      • Line of Credit
      • ATO Tax Debt
      • Debtor Finance
      • Business Overdrafts
Contact
broken image
broken image
  • Abundance
  • Business Specialists 
    • Business Specialists
    • Articles
  • Choosing the Right Loan 
    • Choosing the Right Loan
    • Construction Loans
    • Asset Finance
    • Refinancing
    • Line of Credit
    • ATO Tax Debt
    • Debtor Finance
    • Business Overdrafts
  • …  
    • Abundance
    • Business Specialists 
      • Business Specialists
      • Articles
    • Choosing the Right Loan 
      • Choosing the Right Loan
      • Construction Loans
      • Asset Finance
      • Refinancing
      • Line of Credit
      • ATO Tax Debt
      • Debtor Finance
      • Business Overdrafts
Contact
broken image

Security for a business loan

Secured business loans play an important role in supporting small business owners as they look to operate and grow their businesses. 

 

Secured loans require collateral, providing lenders with an added layer of security. This is different to unsecured loans, which relies on the borrower’s creditworthiness. However, there are different types of collateral accepted for secured business loans.

Real estate

Among the most common forms of collateral accepted for secured business loans is real estate. Whether it's land, buildings, or residential properties, real estate assets offer tangible security for lenders. Property ownership provides reassurance that, in the event of default, lenders can seize and liquidate the asset to recoup their investment, making it a favoured choice for businesses seeking substantial financing.

Equipment

Industries reliant on machinery and specialised tools, such as manufacturing, construction, or transportation, often pledge equipment as collateral for secured loans. Machinery, vehicles, and other operational assets serve as valuable collateral, offering lenders a tangible asset base with a known resale value.

Inventory

Retailers and wholesalers can leverage their inventory as collateral for secured business loans. Whether it's raw materials, finished goods, or future inventory orders, businesses can tap into their stockpile to secure financing for expansion or operational requirements. Inventory-backed loans provide a flexible financing option, aligning with the cyclical nature of businesses reliant on changing inventory levels.

Accounts receivable

Service-based businesses or those with substantial client bases often pledge their accounts receivable as collateral. Outstanding invoices or anticipated receivables serve as a reliable income stream for lenders, mitigating the risk of default. Accounts receivable financing enables businesses to unlock liquidity tied up in unpaid invoices, facilitating cash flow management and operational continuity.

Alternative forms of collateral

Intellectual property

Innovation-driven enterprises with valuable intellectual property assets, including patents, trademarks, or copyrights, can potentially use them as collateral for secured business loans. While less conventional, intellectual property assets represent a unique form of value, providing lenders with additional assurance of loan repayment.

Cash savings or investments

Businesses with substantial cash reserves or investment portfolios can leverage them as collateral. Cash savings offer immediate liquidity, while investments provide long-term value, serving as tangible assets to support loan applications.

Personal assets

In certain instances, business owners may pledge personal assets, such as personal real estate, investments, or savings, as collateral for business loans. This option is particularly relevant for startups or small businesses with limited business assets, providing an avenue for securing financing.

Previous
Five important steps before making an offer
Next
How to hit your financial goals in the new year
 Return to site
Cookie Use
We use cookies to improve browsing experience, security, and data collection. By accepting, you agree to the use of cookies for advertising and analytics. You can change your cookie settings at any time. Learn More
Accept all
Settings
Decline All
Cookie Settings
Necessary Cookies
These cookies enable core functionality such as security, network management, and accessibility. These cookies can’t be switched off.
Analytics Cookies
These cookies help us better understand how visitors interact with our website and help us discover errors.
Preferences Cookies
These cookies allow the website to remember choices you've made to provide enhanced functionality and personalization.
Save