Can business loans be secured online?

Answer 1

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What Are Secured Business Loans?

Secured business loans, sometimes called collateralized loans, are a common type of small business financing that’s secured by some type of personal guarantee or valuable asset. If you aren’t able to repay your business loan, the lender can use the collateralized assets or personal guarantee to legally recoup their losses.

In the end, you’ll get a better loan offer—lower interest rates and longer terms—with secured business loans. In some ways, you’re giving the lender a sense of security—they’re guaranteed to get their money back one way or another.

Is a secured loan right for your business? We’re here to help you find out.

In this guide, we’ll review everything you need to know about secured business loans—including how they work, what types of secured loans are out there, and where you can apply to the best options.

Table of Contents

How Do Secured Loans Work?

Secured vs. Unsecured Loans

How to Secure a Business Loan

Types of Secured Business Loans

Best Lender Options

The Bottom Line

Frequently Asked Questions

How Do Secured Business Loans Work?

As we mentioned, secured business loans are those that require some type of collateral (i.e. backing, anything your business owns that can be turned into cash) to access financing.

Although, as we’ll discuss below, secured loans can take many forms, they’re generally structured as business term loans. In this case, you receive a lump sum of capital from a lender and pay it back, with interest, over a set period of time.

This being said, when it comes down to it, most business loans are secured in some way or another. After all, from the lender’s perspective, providing financing to small businesses is a risky endeavor, especially when working with startups or businesses with bad credit.

Secured loans, therefore, mitigate some of this risk—as you’re giving the lender the right to seize and liquidate specific assets (the collateral you used to secure the loan) in the event you can’t pay.

Secured vs. Unsecured Business Loans

With this information in mind, you might be wondering: What’s the difference between secured loans and unsecured loans?

In short, whereas secured business loans require you to put up collateral to access financing, unsecured business loans don’t.

However, the term “unsecured” here can be a little misleading. Although unsecured loans may not require that you offer up collateral or physical assets, the lender will mitigate their risk in some other way—typically be requiring a personal guarantee or taking out a UCC-lien on your business.

In addition, unsecured loans often have higher interest rates in comparison to secured business loans—again, because secured loans offer greater security for the lender, allowing them to offer you capital at lower rates.

Use our guide to learn more about unsecured business loans.

How to Secure a Business Loan: 7 Different Ways

As we mentioned above, collateral (in some form) is the key to secured business loans, as it decreases the lender’s risk and makes them more willing to offer the capital you need.

So, what can you use to secure a business loan? Here are seven different options:

Property

When you apply for secured business loans, you might be asked to put up your real estate assets or home equity as collateral for the loan. This is the most common type of collateral used by borrowers.

When you put up your home or real estate holdings to get a loan for your business, you’re giving the lender permission to seize these assets if you default on your loan.

However, property doesn’t refer only to real estate. You can also offer equipment, cars, motorcycles, boats, etc. as collateral on a business loan.

Savings

Sometimes referred to as “cash-secured loans” or “passbook loans,” these secured business loans use the cash in your bank to serve as collateral for the loan.

If you default on your loan, the lender can liquidate your savings account in order to recoup their money.

Additionally, from a lender’s perspective, this is one of the best types of collateral. After all, it’s very low risk for them—if you default on your business loan, they can instantly get their money back.

Plus, they won’t have to go through the hassle of selling a physical asset, such as a house, a piece of equipment, or a car.

Invoices

Many small business owners have customers who don’t pay their invoices right away—and suffer cash flow issues because of it.

In this case, those unpaid invoices represent income for your company, and they can be offered up as collateral for loans, too.

Answer 2

Just as any other loan. Yes a business loan can be secured online. My companies secure business loans online.