What assets can be used as collateral for a business loan?

Common business loan collateral includes commercial real estate, equipment and machinery, accounts receivable, inventory, vehicles, and business-owned investments. Personal assets — including a home — may also be required as collateral for larger loans, especially through SBA programs. The asset's liquidation value determines how much you can borrow against it.

Do collateral loans have lower interest rates?

Yes — secured loans backed by collateral typically carry lower interest rates than unsecured loans because the lender's risk is reduced. The better the collateral (real estate vs. inventory, for example), the better the rate. Collateral loans also tend to have higher approval rates and longer repayment terms than unsecured alternatives.

What happens if I default on a collateral loan?

If you default, the lender has the legal right to seize and sell the pledged collateral to recover the outstanding debt. For real estate collateral, this means foreclosure. For equipment or vehicles, repossession. It's critical to understand what you're pledging before securing a loan with a valuable asset — particularly your primary residence or essential business equipment.

Collateral Loans

Put Your Assets to Work

Collateral loans let you leverage your existing assets — real estate, equipment, inventory, or receivables — to access lower interest rates, larger loan amounts, and more flexible qualification criteria.

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Up to $10MMaximum Loan Amounts

Lower Ratesvs. Unsecured Loans

2–7 DaysAverage Funding Time

Many TypesAcceptable Collateral

What Is a Collateral Loan?

A collateral loan — also called a secured loan or asset-based loan — is any business loan backed by a specific asset that the lender can claim if the borrower defaults. Because the lender's risk is reduced, collateral loans typically offer lower interest rates and higher loan amounts than unsecured alternatives. Businesses that also maintain a strong business credit score often qualify for even better collateral loan terms, since both factors reduce the lender's perceived risk.

How It Works

1
Asset Appraisal
The lender assesses the value of your proposed collateral to determine the loan-to-value (LTV) ratio.
2
Loan Structuring
Based on collateral value, your loan amount, rate, and term are determined.
3
Lien Filing
The lender files a lien on the collateral — you keep using it while you repay the loan.
4
Funds Deposited
Loan proceeds are deposited to your business account. Lien is released upon full repayment.

Key Advantages

Access larger loan amounts than unsecured financing
Lower interest rates due to reduced lender risk
More accessible for businesses with lower credit scores — while you build business credit on the side
Longer repayment terms available
Continue using assets while loan is active

Qualification Requirements

Verifiable business assets with clear title
Credit score 550+ (flexible with strong collateral)
At least 1 year in business
Clean UCC search preferred

Acceptable Types of Collateral

Collateral Type	Typical LTV	Notes
Commercial Real Estate	Up to 80%	Strongest collateral option
Equipment & Machinery	70–90%	Based on liquidation value
Accounts Receivable	70–85%	Quality of customers matters
Inventory	40–60%	Lower due to liquidation risk
Business Vehicles	Up to 85%	Title must be clear
Marketable Securities	Up to 90%	Stocks, bonds, CDs

Illustrative example terms shown for demonstration only. Not an offer or guarantee of financing.

Sources & Further Reading

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