Secured business loan

A secured business loan is backed by collateral, an asset such as real estate, equipment, inventory, or accounts receivable that the lender can seize if you fail to repay. That security reduces the lender's risk, which usually translates into lower rates, larger loan amounts, and longer terms than an unsecured loan. The lender will value the collateral and typically lend a percentage of that value, and it files a UCC lien or takes a similar claim to record its interest. Many business loans, including equipment financing and commercial real estate loans, are secured by the very asset being financed.

This fits businesses that have valuable assets to pledge and want the best available rate or a larger amount than an unsecured loan would allow. The clear benefit is cheaper, bigger financing, but the trade off is real: if you default, you can lose the pledged asset, and most secured loans still include a personal guarantee on top. Approval and pricing depend on the type and value of the collateral, your credit, and your cash flow. Make sure you understand exactly which assets are pledged and what happens if payments fall behind.