Small Business Loans: The 5 Best Forms Of Collateral

When trying to secure small business loans, most entrepreneurs will be asked to put up some form of collateral. This is done as a form of insurance against bankruptcy or defaulting on the loan agreement. However, most small business owners are under the impression that they need to put up personal property against small business loans. In fact, there are safer, and more stable forms of collateral which most businesses can use to secure small business loans.

Business Vehicles

Whether your business has a company car or a fleet of delivery trucks, vehicles can be used as collateral for business loans. In some cases, such as with construction companies, machinery – like excavators and bulldozers – will also count as vehicles.

Receivables

Receivables are one of the more frequently overlooked sources of collateral. Receivables are considered property or assets, and can therefore be used as collateral against small business loans. In fact, receivables can be used to secure up to 100 percent of the requested loan amount.

Commercial Property

If a business owns its offices or facilities, or if an entrepreneur owns commercial property of any kind – it can be used as collateral against a business loan. While considered less “secure” than residential property, using commercial real estate makes more sense for entrepreneurs than using their personal homes.

Revenue

For businesses open for two years or less, there are special loan programs which focus on revenue and profitability, over other requirements. In these cases, it is sometimes possible to get an unsecured loan without having to put up any collateral at all. Business loans of this nature can go a long way to ensuring growth for emerging business owners.

Purchase Orders

Large purchase orders from customers can be used as collateral for small business loans. While similar to receivables, a purchase order acts as a note for future revenue, and has an intrinsic value which lenders can use to structure a loan agreement. Using purchase orders is not something many traditional lenders, such as banks, use – but commercial finance professionals can arrange loans quickly using this method.

Securing Small Business Loans For Your Company

If you would like a no-obligation assessment, and get the small business loans you need to meet your goals, contact CounselPro Lending. We can arrange small business loans, asset-based lines of credit, and much more. Call us today at 1-888-292-3322.

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