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Secured Business Loans: Compare the Best Options for 2022

Business loans secured by collateral can help mitigate risk for the lender, giving small-business owners access to more competitive rates and terms.
Written by Randa Kriss
Edited by Sally Lauckner
Last updated on February 1, 2022

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A secured business loan is backed by collateral, typically business assets, like property, inventory or equipment. These small-business loans can also be secured by a personal guarantee or a Uniform Commercial Code lien. If you fail to repay a secured business loan, the lender can claim the collateral you've pledged to recover its losses.
Below, you’ll find our picks for the best secured business loans — plus more information on this type of financing.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are 6 options for you

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Max loan amount
Min. credit score
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TAB Bank - Term loan

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Best for Bank secured business loans$200,000650

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SBA 7(a) loan

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Best for SBA secured business loans$5,000,000650

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Funding Circle - Online term loan

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Best for Online secured business loans$500,000660

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Credibility Capital - Online term loan

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Best for Online secured business loans$500,000650

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PNC Bank - Line of credit

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Best for Secured business lines of credit$100,000720

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Triton Capital - Equipment financing

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Best for Secured equipment loans$250,000600

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Our pick for

Bank secured business loans

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TAB Bank - Term loan

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Max Loan Amount

$200,000

Min. Credit Score

650

Est. APR

8.99-35.99%

Depending on your creditworthiness and your business's financials

TAB Bank offers competitive interest rates for business owners with strong credit — and can sometimes fund faster than an SBA loan.

Our pick for

SBA secured business loans

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SBA 7(a) loan

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Max Loan Amount

$5,000,000

Min. Credit Score

650

Est. APR

5.50-8.00%

Depending on your creditworthiness and your business's financials

7(a) program participants include specialized lenders like Live Oak Bank and big-name traditional banks like Wells Fargo.
Lowest interest rate

Our picks for

Online secured business loans

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Funding Circle - Online term loan

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Max Loan Amount

$500,000

Min. Credit Score

660

Est. APR

10.13-36.00%

Depending on your creditworthiness and your business's financials

Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.
May fund quickly
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Credibility Capital - Online term loan

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Max Loan Amount

$500,000

Min. Credit Score

650

Est. APR

6.99-24.99%

Depending on your creditworthiness and your business's financials

Credibility Capital offers low-cost business loans that work best for small-business owners with strong credit.

Our pick for

Secured business lines of credit

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PNC Bank - Line of credit

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Max Loan Amount

$100,000

Min. Credit Score

720

Est. APR

12.24-14.24%

Depending on your creditworthiness and your business's financials

PNC offers a revolving line of credit that works similarly to a credit card, but you’ll need excellent credit and multiple years in business to qualify.

Our pick for

Secured equipment loans

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Triton Capital - Equipment financing

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Max Loan Amount

$250,000

Min. Credit Score

600

Est. APR

4.99-25.00%

Depending on your creditworthiness and your business's financials

Triton Capital offers fast equipment loans up to $250,000 for businesses in a range of industries.

How Much Do You Need?

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How do secured business loans work?

Secured business loans are backed by some form of collateral, often tangible business assets. The collateral that you pledge serves as security for the lender — a guarantee that you’ll repay the funds you’ve borrowed.
If you can’t repay the loan and default on your payments, however, the lender can seize and resell your collateral to recoup the money it’s lost.
Some lenders prefer secured business loans because the guarantee associated with collateral helps mitigate the risk they face when issuing financing to small businesses.

How to secure a business loan

There are a variety of ways to secure a business loan, including:
  • Property: Both business and personal assets — like real estate, office or manufacturing equipment, cars, your home — can be used as collateral. Lenders may require an appraisal of your collateral to determine its value as part of the loan application process.
  • Savings: You can use the cash in your bank account to secure a business loan. Some lenders may prefer cash, as it’s the most liquid type of collateral.
  • Equipment: Equipment you already own can be used as collateral. However, you can also get self-securing financing, in which the equipment you’re looking to purchase serves as collateral on the loan.
  • Invoices: You can use your outstanding customer invoices as collateral to get a cash advance from a lender. Also known as invoice financing, lenders advance you a percentage of your unpaid invoice amount, and when your customer pays the invoice, you receive the remaining percentage minus the company’s fees.
  • Inventory: Similar to equipment, inventory can be used to secure a loan in two different ways. You can use existing inventory as collateral or you can get financing to purchase inventory to sell that is then secured by the products you purchase.
  • Personal guarantee: A personal guarantee is a legal agreement that holds you personally responsible for your business’s debt and allows the lender to claim your personal assets to cover the debt in the event your business can’t pay.
  • UCC lien: A UCC lien gives a lender the right to seize your business’s assets if you can’t repay your loan. A UCC lien is an official document, typically filed with the applicable secretary of state’s office after you’ve signed your loan agreement. Lenders may file a UCC lien on specific business assets such as equipment, or they’ll file a blanket lien, which covers all assets.
Some secured business loans are backed by physical assets, as well as personal guarantees and/or UCC liens.
Take SBA 7(a) loans, for example. Collateral is required to the maximum extent possible for loans greater than $350,000 and may be required for loans between $25,000 and $350,0000. All SBA 7(a) loans also require a personal guarantee.
And although unsecured business loans don’t require physical collateral, most are backed by either a personal guarantee or a UCC lien.

Pros and cons of secured business loans

Pros

  • Better loan terms. Pledging collateral mitigates risk for the lender and can help you access larger loan amounts, lower interest rates and longer repayment terms — especially if you have strong credit and business financials.
  • Increased chances of approval. If you can offer collateral, you may be more likely to get approved for a business loan, even if you’re a newer business or don’t have a perfect credit history.

Cons

  • Assets at stake. When you use your assets as collateral for a secured business loan, you risk losing them if you can’t repay your financing.
  • Slow to fund. Secured business loans can be slower to fund than unsecured loans, especially if the lender requires an appraisal of your collateral.

Where to get a secured business loan

Secured small-business loans are available from banks, credit unions and online lenders.
These lenders can offer many different types of business loans with collateral, including traditional term loans, SBA loans and business lines of credit, as well as equipment loans, invoice financing and inventory financing. Loan amounts, interest rates and repayment terms can vary by lender.

Banks and credit unions

In general, banks and credit unions can offer loans with the most competitive rates and terms but will have the strictest qualifications. To qualify for secured bank financing, you’ll likely need several years in business, strong credit and excellent financials in addition to collateral to back up the loan.
Compared to online lenders, banks and credit unions are typically slower to fund, and appraisals on collateral can further delay the process.

SBA lenders

SBA loans are issued by banks and credit unions and partially guaranteed by the U.S. Small Business Administration. They can be a little easier to qualify for than bank loans. These loans offer low interest rates and long repayment terms, and likely require collateral for financing over $25,000.
To qualify for an SBA loan, you’ll typically need solid financials, a few years in business and good credit. Like bank loans, SBA loans can be slow to fund, unless you opt for the expedited SBA Express loan, which requires a 36-hour turnaround time on applications.

Online lenders

If you can’t qualify for a bank or SBA loan — or need faster financing — online lenders generally have more flexible eligibility criteria and can sometimes fund loans within 24 hours. Some online lenders are willing to work with new businesses or those with bad credit.
Although pledging collateral can help you access better interest rates and terms, loans from online lenders will typically be more expensive than those from traditional lenders.

Compare small-business loans

For a look beyond secured business loans, check out NerdWallet’s list of best small-business loans for business owners. Our recommendations are based on the market scope and track record of lenders, the needs of business owners, and an analysis of rates and other factors, so you can make the right financing decision.
Last updated on February 1, 2022

To recap our selections...

Secured Business Loans: Compare the Best Options for 2022