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Secured Business Line of Credit: Best Options for 2024

By Randa Kriss
Last updated on February 29, 2024
Edited bySally Lauckner
Fact checked and reviewed

⏰ Estimated read time: 6 minutes

Secured business lines of credit allow you to leverage your assets to access affordable working capital.

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A secured business line of credit is backed by specific collateral, such as inventory or equipment. If you can’t repay your credit line, your lender can seize your pledged assets to recover its losses.
Providing collateral reduces risk for the lender — allowing you to access the most competitive interest rates and repayment terms. This security can also help strengthen your small-business loan application, especially if you’re a newer business or have a rocky credit history.

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 3 secured business lines of credit

LenderNerdWallet RatingMax loan amountMin. credit scoreNext steps

SBA 7(a) loan

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Best for SBA secured business lines of credit

$5,000,000650

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Bank of America Cash Secured Line of credit

5.0/5

Best for Cash secured business lines of credit

Undisclosed670

Wells Fargo Prime line of credit

4.5/5

Best for Large secured business lines of credit

$1,000,000680

Here are 3 secured business lines of credit

Best for SBA secured business lines of credit

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

650

Best for Cash secured business lines of credit

Bank of America

Max Amount

Undisclosed

Min. Credit Score

670

Best for Large secured business lines of credit

Wells Fargo

Max Amount

$1,000,000

Min. Credit Score

680

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Our pick for

SBA secured business lines of credit

Through the SBA’s CAPLines program, you can choose from four credit line options. Each line of credit is designed for a specific purpose, including working capital, seasonal slows, construction and contract orders.

SBA 7(a) loan

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Max Loan Amount
$5,000,000
Min. credit score
650
Est. APR
11.50-15.00%
7(a) loans are issued by private lenders and backed by the SBA. They offer long repayment terms and low interest rates.
Lowest interest rate

Max loan

$5,000,000

Min. Credit score

650

Apr range

11.50-15.00%

7(a) loans are issued by private lenders and backed by the SBA. They offer long repayment terms and low interest rates.

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Our pick for

Cash secured business lines of credit

Companies with at least six months in operation can use Bank of America’s secured credit line to establish business credit. Timely payments can help borrowers graduate to an unsecured line of credit option.

Bank of America Cash Secured Line of credit

Max Loan Amount
Undisclosed
Min. credit score
670
Bank of America’s Cash Secured line of credit can help startups cover working capital needs and establish business credit.

Max loan

Undisclosed

Min. Credit score

670

Bank of America’s Cash Secured line of credit can help startups cover working capital needs and establish business credit.

Our pick for

Large secured business lines of credit

Wells Fargo’s secured business line of credit is available in amounts up to $1 million. This credit line is designed for established companies that need to finance larger working capital needs.

Wells Fargo Prime line of credit

Max Loan Amount
$1,000,000
Min. credit score
680
Wells Fargo’s secured line of credit is a good option for well-established businesses that want access to large amounts of working capital.

Max loan

$1,000,000

Min. Credit score

680

Wells Fargo’s secured line of credit is a good option for well-established businesses that want access to large amounts of working capital.

How Much Do You Need?

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What is a secured business line of credit?

Secured business lines of credit are backed by some type of collateral, typically tangible business assets like property or equipment. The collateral you provide serves as a form of security for your lender — if you fail to repay, the lender can claim and sell your pledged assets to cover its losses.
Some lenders may also require a personal guarantee and/or a Uniform Commercial Code (UCC) filing — in addition to specific collateral.
A personal guarantee holds you personally responsible for the debt if your business can’t pay, and a UCC filing allows your lender to seize your business assets if you default. These documents provide further protection for your lender to ensure that your credit line is repaid.

How does a secured business line of credit work?

Like any other business line of credit, a secured credit line allows you to borrow from a set limit of funds and only pay interest on the money you borrow.
Then, you repay what you’ve borrowed over time — usually on a weekly or monthly schedule. You can continue to draw on your credit line, as needed, provided that you make timely payments and don’t exceed your credit limit.

Unsecured vs. secured business line of credit

Unlike secured lines of credit, unsecured business lines of credit are not backed by physical collateral. These credit lines may, however, require a personal guarantee and/or UCC lien. Despite the terminology, it’s unlikely that you’ll find an unsecured line of credit that doesn’t include any protection for the lender.
When you don’t provide collateral, lenders may see your business as more of a risk. As a result, unsecured lines of credit tend to have lower funding amounts, shorter repayment terms and higher interest rates compared with secured credit lines.

Pros and cons of a secured business line of credit

Pros

  • Better rates and terms. When you provide collateral, you offset some of the risk a lender takes when issuing financing to your business. You should be able to qualify for competitive interest rates and repayment terms on a secured credit line — especially if you have a good credit history and strong finances.
  • Increased chances of approval. Securing your line of credit with collateral can help strengthen your loan application, especially if you’re a newer business or you have a rocky credit history.

Cons

  • Slower to fund. Secured business lines of credit can take longer to fund as your lender may require an appraisal of the assets you’re putting up as collateral. Compared with unsecured lines of credit, you’ll also have to provide more documentation describing your collateral and its value.
  • Assets at risk. If you can’t repay your line of credit, your lender can seize the assets you used as collateral to recover their losses.

Where to get a secured business line of credit

Secured business lines of credit are available from traditional and online lenders. The right option for you will depend on factors such as funding needs, speed, interest rates and qualifications, among others.

Banks and credit unions

Banks and credit unions will typically provide credit lines with the most competitive interest rates and terms. These lenders may offer different ways to secure your line of credit — like a certificate of deposit or non-real estate business assets.
To qualify, however, you’ll generally need multiple years in business, good credit and strong finances. Business bank loans are also slow to fund. Wells Fargo’s secured credit line, for example, takes up to two weeks just for processing after you’ve submitted your documentation.

SBA lenders

SBA lenders offer secured lines of credit through the 7(a) loan program. Some SBA lenders, usually banks and credit unions, provide credit lines through the CAPLines program, which falls under the larger 7(a) umbrella.
There are four types of these SBA lines of credit, designed for specific use cases, such as working capital, seasonal slows and contract orders. To qualify, you’ll need to meet standard requirements for the SBA 7(a) loan program as well as criteria for the individual credit line you need. Collateral requirements also vary based on the specific credit line.
If you don’t qualify for one of these credit lines through a bank or credit union, you may be able to get financing through a Community Advantage Small Business Lending Company (previously a Community Advantage lender).
Through the new CA SBLC license, these nonprofit and community lenders can issue 7(a) loans, while continuing to focus on helping borrowers in traditionally underserved markets, including startups and those in low-income communities.

Online lenders

Online lenders tend to provide fast, flexible funding. Compared with bank and SBA lenders, these companies typically have more lenient qualification requirements but higher interest rates.
Although some online lenders may issue secured credit lines, many offer unsecured lines of credit instead. If you need faster access to working capital but don’t want to pay a premium on speed and flexibility, you might try talking to an online lender about its collateral policies.
Though the lender may not require collateral, it may allow you to secure your line of credit to access more competitive terms.

Find the right business loan

The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.
Last updated on February 29, 2024

Methodology

NerdWallet reviewed traditional and online lenders to create our list of the best secured business lines of credit.
Our list includes a variety of loan options to meet the diverse funding needs of small-business owners, with an emphasis on lenders that offer a streamlined underwriting and approval process.
Each small-business loan option on our list meets the following criteria:
• Maximum loan amount of at least $50,000.
• Transparent rates and repayment terms.
• Personal credit score requirements of 700 or below.
• No more than two years in business required.

Wondering if you qualify?

It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.

Learn more

Frequently Asked Questions

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