A secured business loan is financing backed by collateral, an asset the lender can claim if the loan isn’t repaid. Because collateral lowers the lender’s risk, secured loans are often easier to qualify for and can come with larger amounts or longer terms than unsecured business loans. This guide explains what you can use as collateral, how lenders value it, and the questions to ask before you pledge business or personal assets.
Key takeaways
- A secured business loan is backed by collateral the lender can claim if the loan isn’t repaid.
- Equipment, real estate, receivables, inventory and cash can all serve as collateral.
- Lenders lend a share of the collateral’s value, not all of it, and still review cash flow.
- Check whether the lien covers one asset or everything the business owns.
Can I get a secured business loan?
Many businesses can, as long as they have assets of sufficient value and cash flow to support the payments. Lenders look at both: the collateral reduces their risk, but they still need to see that the business can repay. Approval is always subject to lender review.
What can be used as collateral
- Equipment and vehicles. Machinery, trucks and other titled assets. When the loan buys the equipment, see equipment financing.
- Real estate. Owner-occupied commercial property, and sometimes personal real estate. Larger property purchases may suit an SBA 504 loan.
- Accounts receivable and inventory. Common in asset-based lending and invoice financing.
- Cash and deposits. Savings or certificates of deposit held at the lending bank.
- A blanket lien. Some lenders file a general lien (UCC-1) on all business assets rather than one specific asset.
How lenders value collateral
Lenders usually lend less than an asset’s full value. They apply a loan-to-value limit that depends on how easily they could sell the asset: cash and real estate typically support a higher share than inventory or specialized equipment. Expect an appraisal or inspection for larger loans, and requirements to insure the asset and keep it in good condition.
Secured vs. unsecured business loans
| Secured | Unsecured | |
|---|---|---|
| Collateral | A specific asset or a blanket lien | No specific asset (a personal guarantee is still common) |
| Approval | Often easier with the right assets | Leans more on credit and revenue |
| Amount and term | Often larger and longer | Often smaller and shorter |
| Risk to you | The pledged asset can be claimed on default | Personal guarantee exposure |
If you’d rather not pledge specific assets, compare a business line of credit or business loans for bad credit, which lean more on revenue.
Questions to ask before you pledge assets
- Is the lien on one asset or on all business assets (a blanket lien)? A blanket lien can make it harder to borrow elsewhere.
- Is a personal guarantee required as well as collateral?
- What happens if the asset’s value falls?
- Are there appraisal, filing or documentation fees?
- Can collateral be released as the balance is paid down?
How to apply for a secured business loan
- List the assets you could pledge and their approximate value.
- Gather recent bank statements and financial statements.
- Apply online with SMB Compass.
- Review the offers you qualify for with our team, including how each one is secured. All offers are subject to approval.
Frequently asked questions
What is a secured business loan? A business loan backed by collateral that the lender can claim if the loan isn’t repaid.
Is a secured loan easier to get? Often, if you have assets with clear value, because collateral reduces the lender’s risk. Lenders still review cash flow and credit.
What happens if I can’t repay a secured business loan? The lender can take and sell the pledged collateral to recover what’s owed, and may pursue any personal guarantee. If you’re struggling, talk to the lender early about options.
Do secured loans require a personal guarantee? Many do, especially for small businesses, in addition to the business collateral.
Explore secured financing with SMB Compass
SMB Compass works with a network of funding partners offering secured financing backed by equipment, receivables, real estate and other business assets. Start your application.
Sources
- Cornell Law School LII, Uniform Commercial Code Article 9: Secured Transactions. https://www.law.cornell.edu/ucc/9. Accessed Nov 2026.
- U.S. Small Business Administration, 7(a) loans. https://www.sba.gov/loans/7a-loans/. Accessed Nov 2026.
- U.S. Small Business Administration, 504 loans. https://www.sba.gov/loans/504-loans/. Accessed Nov 2026.
- FDIC, Commercial Real Estate Lending. https://www.fdic.gov/credit/commercial-real-estate-lending. Accessed Nov 2026.
- U.S. Small Business Administration, Fund your business. https://www.sba.gov/counseling/plan-your-business/#fund-business. Accessed Nov 2026.