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Best Secured Business Loans of July 2024

By Randa Kriss, Rosalie Murphy
Last updated on July 11, 2024
Edited bySally Lauckner
Fact checked and reviewed
A secured business loan requires the borrower to pledge an asset that the lender can sell if the loan is not repaid. Term loans, lines of credit and equipment loans are common types of small-business loans that can be secured by assets such as inventory, vehicles and property.

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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 secured business loans

LenderNerdWallet RatingMax loan amountMin. credit scoreNext steps

Bank of America Business Advantage Secured Term Loan

4.5/5

Best for Bank secured business loans

Undisclosed700
Read Review

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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4.5/5

Best for Fast secured business loans

$500,000660

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Wells Fargo Prime line of credit

4.5/5

Best for Secured business lines of credit

$1,000,000680
Read Review

Triton Capital - Equipment financing

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4.0/5

Best for Secured equipment loans

$250,000575

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SBA Microloan

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Best for Secured business loans for bad credit

$50,000620

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Here are 6 secured business loans

Best for Bank secured business loans

Bank of America

Max Amount

Undisclosed

Min. Credit Score

700

Best for SBA secured business loans

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

650

Best for Fast secured business loans

Funding Circle

Max Amount

$500,000

Min. Credit Score

660

Best for Secured business lines of credit

Wells Fargo

Max Amount

$1,000,000

Min. Credit Score

680

Best for Secured equipment loans

Triton Capital

Max Amount

$250,000

Min. Credit Score

575

Best for Secured business loans for bad credit

U.S. Small Business Administration

Max Amount

$50,000

Min. Credit Score

620

I'M INTERESTED IN:

Our pick for

Bank secured business loans

Bank of America offers secured business loans with competitive rates and terms. You can secure your loan with business assets or certificates of deposit.

Bank of America Business Advantage Secured Term Loan

Max Loan Amount
Undisclosed
Min. credit score
700
Bank of America offers secured business loans with repayment terms up to four or five years — depending on the type of collateral you provide.

Max loan

Undisclosed

Min. Credit score

700

Bank of America offers secured business loans with repayment terms up to four or five years — depending on the type of collateral you provide.

Our pick for

SBA secured business loans

The SBA 7(a) loan offers funding up to $5 million. You’ll typically need to provide collateral for loans greater than $50,000.

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.
Read Review

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Our pick for

Fast secured business loans

You may need to provide personal or business assets to secure one of these online loans. Funding Circle can issue funds in as little as two days.

Funding Circle - Online term loan

Read Review

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Max Loan Amount
$500,000
Min. credit score
660
Est. APR
15.22-45.00%
Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.
May fund quickly

Max loan

$500,000

Min. Credit score

660

Apr range

15.22-45.00%

Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.
Read Review

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Our pick for

Secured business lines of credit

This Wells Fargo line of credit is a good option for established companies with strong revenue. You must secure your credit line with business assets.

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.

Our pick for

Secured equipment loans

With Triton Capital’s equipment financing, the equipment you purchase serves as collateral on the loan.

Triton Capital - Equipment financing

4.0
NerdWallet rating 

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Max Loan Amount
$250,000
Min. credit score
575
Est. APR
5.99-34.99%
Triton Capital offers fast equipment loans up to $250,000 for businesses in a range of industries.
4.0
NerdWallet rating 

Max loan

$250,000

Min. Credit score

575

Apr range

5.99-34.99%

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

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Our pick for

Secured business loans for bad credit

Although requirements vary based on the lender, many SBA microloan intermediaries will require you to provide some form of collateral. You may be able to qualify, however, with a credit score of 620 or higher.

SBA Microloan

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Max Loan Amount
$50,000
Min. credit score
620
Est. APR
8.00-13.00%
SBA microloans are small-sized loans funded by the U.S. Small Business Administration and issued through approved intermediaries, typically nonprofit and community lenders.

Max loan

$50,000

Min. Credit score

620

Apr range

8.00-13.00%

SBA microloans are small-sized loans funded by the U.S. Small Business Administration and issued through approved intermediaries, typically nonprofit and community lenders.
Read Review

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How Much Do You Need?

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What is a secured business loan?

A secured business loan is backed by some form of collateral, usually tangible business assets, like inventory, property or equipment. If you fail to repay the loan, the lender can claim the collateral to recover its losses.
Because providing collateral reduces risk for the lender, securing a small-business loan can help improve your chances of approval, as well as help you access the most competitive interest rates and repayment terms.

How do secured business loans work?

When you apply for a secured business loan, you’ll need to provide the lender with detailed information on the type of collateral you’re offering. Depending on your collateral, the lender may request an official appraisal to determine its value.
The value of your collateral will be included in your loan agreement, serving as a guarantee that you’ll repay the funds you’ve borrowed. If you can’t repay your financing and your business loan goes into default, the lender can seize and resell your collateral to recover its losses.
Because of the guarantee that collateral provides, many lenders prefer secured business loans as they mitigate their risk of working with small businesses. Providing valuable collateral, therefore, can often help you access larger loan amounts, more competitive interest rates and longer repayment terms.

How to secure a business loan

You can secure a business loan in different ways, using any or several of the following:
  • Property. This can include business and personal assets, such as real estate, office or manufacturing equipment, cars or your home.
  • 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 buy serves as collateral on the loan. This is known as equipment financing.
  • Inventory. Similar to equipment, inventory can be used to secure a loan in two ways. You can use existing inventory as collateral, or you can get inventory financing, in which you use a loan to buy new inventory and that inventory then 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 factoring, 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.
  • Savings. You can use the cash in your bank account to secure a business loan. Some lenders may prefer cash because it’s the most liquid type of collateral.
  • 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 if your business can’t pay. Sometimes, adding a second person to guarantee the loan, or a business cosigner, can also serve as a way to secure a business loan.
  • Uniform Commercial Code 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.
It’s important to note that some secured business loans are backed by physical assets as well as personal guarantees and/or UCC liens. For example, SBA 7(a) loans often require collateral on amounts over $50,000 — all loans also require a personal guarantee.

Types of secured business loans

Any type of business loan can be secured, if backed with physical collateral. Here are some common types of loans, however, that may require collateral:

SBA loans

SBA loans are issued by banks and credit unions and partially guaranteed by the U.S. Small Business Administration. These loans offer low interest rates and long repayment terms, and can be used for a wide variety of purposes.
7(a) loans are the most popular type of SBA loan, and typically require collateral for financing amounts over $50,000. SBA 504 loans, on the other hand, can only be used to finance large, fixed-asset purchases. For these loans, the property or equipment you’re purchasing serves as collateral.

Business term loans

A business term loan is a lump sum of capital that you borrow from a lender and repay over a specific period of time, with interest. Although some online lenders issue secured term loans, you’re more likely to find these options from banks and credit unions.
Secured term loans often have longer repayment terms and lower interest rates than their unsecured counterparts.

Business line of credit

A business line of credit allows you to borrow up to a certain amount and only pay interest on the funds you borrow. You then repay the funds and can continue to pull from your credit line. Like term loans, secured business lines of credit are more prevalent among traditional lenders.
Secured business lines of credit may offer larger credit limits and lower interest rates. You may also find certain secured credit lines designed to help newer businesses build credit and establish a positive account history.

Equipment financing

Equipment financing is a loan that’s used specifically to buy machinery or equipment for your business. With this type of loan, the equipment you purchase serves as collateral on the loan.
Because the equipment itself serves as collateral, you may not need to rely as heavily on other standard business loan requirements, such as personal credit or time in business to qualify.

Commercial real estate loans

Commercial real estate loans are used to purchase or renovate commercial properties. Similar to the way equipment financing works, these loans are secured by the commercial property that you’re purchasing or renovating.
To qualify for a commercial real estate loan, however, you’ll likely need multiple years in business and strong credit. You may also need to provide a down payment on the loan.

Secured vs. unsecured business loans

Unlike secured business loans, unsecured business loans don’t require you to provide physical collateral. They might, however, still require a personal guarantee or UCC lien.
As a result, here are the key differences between secured and unsecured business loans:
Secured business loans
Unsecured business loans
Collateral requirements
Typically require physical or financial collateral and may also require a UCC lien or personal guarantee.
Typically require a UCC lien or personal guarantee.
Loan terms
Tend to be longer because your collateral reduces the lender’s risk.
Tend to be shorter so the lender can be repaid quickly.
Interest rates
May be lower than unsecured business loans, depending on the lender and your overall qualifications.
May be higher than secured business loans, depending on the lender and your overall qualifications.

Pros and cons of secured business loans

Pros

Using collateral to reduce risk for the lender may help you access larger loan amounts, lower interest rates and longer repayment terms.

Collateral may increase chances of approval; can help newer businesses or borrowers with bad credit qualify.

Cons

Assets you use as collateral are at risk if you can’t repay your financing.

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

A green bank that has a coin slot at the top where a hand is depositing a coin.
Banks and credit unionsIn 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 with online lenders, banks and credit unions are typically slower to fund, and appraisals on collateral can further delay the process.
A green bank.
SBA lendersSBA loans are issued by banks and credit unions, but can be a little easier to qualify for than traditional bank loans. To qualify for an SBA loan, you’ll typically need solid financials, a few years in business and good credit. You'll likely need collateral for 7(a) loans over $50,000. Like bank loans, SBA loans can be slow to fund, unless you opt for the expedited SBA Express loan, which does not require approval from the SBA once a lender has reviewed the application.
Couple of hands typing on a laptop.
Online lendersIf 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 who are facing credit challenges. 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.

How to get a secured business loan

Follow these six steps to get a secured business loan.

1. Determine your funding needs

First, you should determine how much and what type of funding you need. If you’re looking to buy real estate or equipment, for example, a specialized type of financing might be the best fit. On the other hand, if you need working capital or want to fund an expansion, a business term loan might be a better suited choice.
You should also consider how much debt you can afford. It can be helpful to use a business loan calculator to estimate interest costs and potential payment amounts.

2. Evaluate your qualifications

Although collateral will be important to your application, it’s important to understand other business loan requirements as well. Most lenders will consider your personal credit score, time in business and annual revenue in their decision making process.
Banks, credit unions and SBA lenders will typically have stricter requirements compared to online lenders — even if you’re securing a loan. Online loans tend to have higher business loan rates, however.

3. Identify and assess the value of your collateral

You should consider which of your business assets can be used as collateral. Real estate, equipment, inventory and invoices are among potential options.
Once you’ve determined the type of collateral you’re going to use, you’ll want to assess its value. Although your lender may request a separate valuation, performing your own assessment ahead of time can help you better understand your potential borrowing power.
For example, a bank might lend you up to 85% of the value of a secured piece of real estate. If that property was assessed at $500,000, then the maximum amount you could borrow is $425,000.

4. Compare secured business lenders

You should research several options to find the best options for your needs. Banks, credit unions and online lenders may all offer secured business loans.
As you compare different small-business lenders, you’ll want to look into factors such as interest rates, fees, repayment terms, available loan amounts and funding speed. You should also consider a lender’s qualification requirements, customer service and reputation.

5. Gather your documentation and apply

The documents you’ll need to complete your business loan application will vary by lender. In general, however, you’ll be asked to provide some, if not all, of the following:
  • Basic information about you and your business.
  • Business and personal tax returns.
  • Business and personal bank statements.
  • Business financial statements.
  • Detailed information about your collateral.
If you apply with a bank or credit union, you may need to visit a branch to complete and submit your application. Online lenders, on the other hand, offer a streamlined, digital application experience.

6. Review your loan agreement

Once you receive approval, your lender will send you a business loan agreement. You’ll want to review the agreement thoroughly and make sure you understand all of the terms and conditions. Since you’re securing your loan with collateral, you should also verify that all of your collateral information is accurate.
If you have any questions or concerns about the document, you can reach out to your lender for clarification before signing.

Alternatives to secured business loans

If a secured business loan isn’t right for your business, consider these other types of financing:
Unsecured business loans: If you lack existing collateral, unsecured business loans may be a worthwhile option. These loans aren’t secured with physical assets, but they will typically require a personal guarantee and/or UCC lien.
Remember that some funding — like equipment loans or commercial real estate loans — can be secured with the property you’re financing. You don’t necessarily need collateral before you apply to get these kinds of secured loans.
Accounts receivable factoring: Accounts receivable factoring is a type of funding in which you sell your company’s unpaid invoices to a factoring company. This type of financing can be a good option for borrowers with bad or limited credit histories. Because you’re selling your unpaid invoices, factoring companies tend to rely more heavily on your customers’ credit and payment histories when evaluating your application.
Business credit cards: Business credit cards offer flexible financing to businesses of all ages. In particular, startups can use business credit cards to pay for everyday purchases, as approval is based on your personal credit history.
To avoid accruing expensive interest, however, you’ll want to make sure you can pay off your balance every month. Like online business loans, business credit cards usually require you to sign a personal guarantee.
Last updated on July 11, 2024

Methodology

NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including: - Transparency of rates and terms. - Flexible payment options. - Fast funding times. - Accessible customer service. - Reporting of payments to business credit bureaus. - Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans and our editorial guidelines.

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.

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Frequently Asked Questions