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Business Opportunities
Home-based business
opportunities. Earn extra income
from your computer.
Bad Credit Business Loans
Find alternative funding sources if
you have bad credit.
Micro Business Loans
Do you need just a little cash to
grow your business try a microloan
from the SBA.
Business Loan Sources
A little creativity and al lot of
determination can get you the
money you need.
Home-based business
opportunities. Earn extra income
from your computer.
Bad Credit Business Loans
Find alternative funding sources if
you have bad credit.
Micro Business Loans
Do you need just a little cash to
grow your business try a microloan
from the SBA.
Business Loan Sources
A little creativity and al lot of
determination can get you the
money you need.
Secured Credit Business Loans
by rebuildcreditscores.com
August 2007
by rebuildcreditscores.com
August 2007
Types of Business Collateral
Real Property
The business owner can pledge a mortgage interest in real property as security for a business
loan. That real property can be commercial or personal residences. However, pledging personal
residences as security may cause conflicts with lenders and borrowers. A lender may justify this
requirement by seeking to secure the personal guaranty of the business loan. Business owners
may choose to pass on type of loan as foreclosure is too risky to pledge your personal property.
Personal Property
A lien interest in personal property may be pledged to secure a business loan. If the business
owner chooses this option the following documentation is helpful to evaluate the assets:
Automobile
An automobile, in good condition, can actually be used as collateral. Of course you must own the
automobile free and clear and the following documents must accompany the loan application:
Accounts Receivable and Inventory
Borrowers can pledge current business assets as collateral but should be aware that certain
documentation helps lenders properly evaluate the assets and may be required.
Life Insurance
Borrowers may pledge a security interest in the cash surrender value of a life insurance policy to
secure a business loan.
Securities
Business owners with this type of collateral may pledge security interest to secure a business
loan. Borrowers should be prepared to present the lender with brokerage statements or a
schedule of the securities portfolio with up-to-date market price quotes. If the borrower is using
closely held securities as collateral, a memorandum regarding the method of valuation and
recent financial statement of the entity should be prepared.
Deposit Account or Certificates
Lenders will require a schedule of accounts if depository accounts are used as security. The type
of account, current interest paid, maturity date and name of the depository along with recent
statements should be given to the lender. IRA accounts, 401k accounts and Keogh accounts
cannot be used as collateral. It is against the law.
Be Prepared
Small business owners are sometimes ill-prepared when applying for secured business loans.
Current, detailed, itemized and in some cases professional reports, must accompany loan
applications. Borrowers are sometimes surprised at the low valuation lenders give to collateral
assets. Be prepared for the lender to discount the market values of collateral assets as the
lender must maintain a safety margin to counter depreciation of the assets.
Borrowers can protect themselves from a lender’s conservative valuations by providing the
lender with recent comparable sales records for real property, advertisements and reports on
similar assets to those offered as collateral. Collateral is an important determinant lenders use to
qualify secured loan applications. To move the process along as smoothly as possible, prepare a
precise itemization and description of your collateral before submitting the loan application.
Real Property
The business owner can pledge a mortgage interest in real property as security for a business
loan. That real property can be commercial or personal residences. However, pledging personal
residences as security may cause conflicts with lenders and borrowers. A lender may justify this
requirement by seeking to secure the personal guaranty of the business loan. Business owners
may choose to pass on type of loan as foreclosure is too risky to pledge your personal property.
Personal Property
A lien interest in personal property may be pledged to secure a business loan. If the business
owner chooses this option the following documentation is helpful to evaluate the assets:
- Description
- Appraisal
- Photographs
- Price Quotations
Automobile
An automobile, in good condition, can actually be used as collateral. Of course you must own the
automobile free and clear and the following documents must accompany the loan application:
- Description
- Title
- Appraisal
- Photographs
Accounts Receivable and Inventory
Borrowers can pledge current business assets as collateral but should be aware that certain
documentation helps lenders properly evaluate the assets and may be required.
- Inventory valuation
- Inventory report
- Bad debt schedule
- Age of accounts receivables
- Borrowing base certificates
- Customer lists
Life Insurance
Borrowers may pledge a security interest in the cash surrender value of a life insurance policy to
secure a business loan.
Securities
Business owners with this type of collateral may pledge security interest to secure a business
loan. Borrowers should be prepared to present the lender with brokerage statements or a
schedule of the securities portfolio with up-to-date market price quotes. If the borrower is using
closely held securities as collateral, a memorandum regarding the method of valuation and
recent financial statement of the entity should be prepared.
Deposit Account or Certificates
Lenders will require a schedule of accounts if depository accounts are used as security. The type
of account, current interest paid, maturity date and name of the depository along with recent
statements should be given to the lender. IRA accounts, 401k accounts and Keogh accounts
cannot be used as collateral. It is against the law.
Be Prepared
Small business owners are sometimes ill-prepared when applying for secured business loans.
Current, detailed, itemized and in some cases professional reports, must accompany loan
applications. Borrowers are sometimes surprised at the low valuation lenders give to collateral
assets. Be prepared for the lender to discount the market values of collateral assets as the
lender must maintain a safety margin to counter depreciation of the assets.
Borrowers can protect themselves from a lender’s conservative valuations by providing the
lender with recent comparable sales records for real property, advertisements and reports on
similar assets to those offered as collateral. Collateral is an important determinant lenders use to
qualify secured loan applications. To move the process along as smoothly as possible, prepare a
precise itemization and description of your collateral before submitting the loan application.
For small and start-up businesses a secured
business loan may be an easier option than an
unsecured, no collateral loan. With a secured
business loan assets are used as collateral to
secure payment if the loan goes into default.
The collateral used for securing the loan will
determine the amount of the loan. Preparation
is most important when applying for a secured
business loan
The requirements are different and you can
expect for a lot more paperwork Below are a
few items which can be used as collateral
along with tips before you apply.
business loan may be an easier option than an
unsecured, no collateral loan. With a secured
business loan assets are used as collateral to
secure payment if the loan goes into default.
The collateral used for securing the loan will
determine the amount of the loan. Preparation
is most important when applying for a secured
business loan
The requirements are different and you can
expect for a lot more paperwork Below are a
few items which can be used as collateral
along with tips before you apply.
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