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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 5 secured business loans
| Lender | NerdWallet Rating▼ | Max loan amount▼ | Min. credit score▼ | Next steps |
|---|---|---|---|---|
TAB Bank - Term loan | Best for Bank secured business loans | $300,000 | 660 | |
SBA 7(a) loan with Fundera by NerdWallet | Best for SBA secured business loans | $5,000,000 | 650 | with Fundera by NerdWallet |
Funding Circle - Online term loan with Fundera by NerdWallet | 5.0/5 Best for Online secured business loans | $500,000 | 660 | with Fundera by NerdWallet |
PNC Bank - Line of credit | Best for Secured business lines of credit | $100,000 | 720 | Read Review |
Triton Capital - Equipment financing with Fundera by NerdWallet | 4.0/5 Best for Secured equipment loans | $250,000 | 600 | with Fundera by NerdWallet |
Here are 5 secured business loans
Best for Bank secured business loans
TAB Bank
Max Amount
$300,000
Min. Credit Score
660
Best for SBA secured business loans
Best for Online secured business loans
Best for Secured business lines of credit
Best for Secured equipment loans
Our pick for
Bank secured business loans
TAB Bank - Term loan
Max Loan Amount
$300,000
Min. credit score
660
Est. APR
8.99-35.99%
TAB Bank offers competitive interest rates for business owners with strong credit — and can sometimes fund faster than an SBA loan.
Max loan
$300,000
Min. Credit score
660
Apr range
8.99-35.99%
Our pick for
SBA secured business loans
SBA 7(a) loan
Max Loan Amount
$5,000,000
Min. credit score
650
Est. APR
11.50-15.00%
7(a) program participants include specialized lenders like Live Oak Bank and big-name traditional banks like Wells Fargo.
Lowest interest rate
Max loan
$5,000,000
Min. Credit score
650
Apr range
11.50-15.00%
Our pick for
Online secured business loans
Funding Circle - Online term loan
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%
Our pick for
Secured business lines of credit
PNC Bank - Line of credit
Max Loan Amount
$100,000
Min. credit score
720
Est. APR
15.99-17.99%
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.
Max loan
$100,000
Min. Credit score
720
Apr range
15.99-17.99%
Our pick for
Secured equipment loans
Triton Capital - Equipment financing
4.0
NerdWallet rating with Fundera by NerdWallet
Max Loan Amount
$250,000
Min. credit score
600
Est. APR
5.99-35.00%
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
600
Apr range
5.99-35.00%
with Fundera by NerdWallet
What is a secured business loan?
A secured business loan is a business loan that is backed by some form of collateral, often tangible business assets like property or equipment. This collateral “secures” the lender’s risk in loaning you money, and can help improve your chances of approval and positively affect your interest rate or repayment terms.
How do secured business loans work?
The application process for a secured business loan may be longer than an unsecured loan, depending on how you are securing the loan. If you are pledging property, for example, the lender will likely request an appraisal to determine the value of the property. Once the value of the collateral is determined, it will be detailed in the agreement you sign at closing and serves as a guarantee that you’ll repay the funds you’ve borrowed.
If you can’t repay the loan and default on your payments, the lender can seize and resell your collateral to recoup the money it has lost, which is why some lenders prefer secured business loans. The guarantee associated with collateral helps mitigate the risk they face when issuing financing to small businesses.
How do you secure a business loan?
There are a variety of ways to secure a business loan.
Physical assets
- Property: 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. If you’re taking out a commercial real estate loan to buy property, the asset you’re purchasing usually serves as 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 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.
Financial assets
- 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.
- 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.
A binding agreement to repay your debt
- 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.
- 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.
Even unsecured business loans typically require a personal guarantee or UCC lien. Entirely unsecured business loans — which require no collateral or guarantee from the borrower — are rare.
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, as the SBA instructs lenders to follow their standard collateral policies for loan amounts of more than $50,000.
All SBA 7(a) loans, which are backed by the U.S. Small Business Administration, also require a personal guarantee.
Pros and cons of secured business loans
Pros
- Better loan terms. Pledging collateral reduces 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.
Secured vs. unsecured business loans
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. |
How to get a secured business loan
Follow these steps to get a secured business loan.
1. Decide what type of secured loan you need. If you’re seeking a loan to buy real estate, equipment or inventory, a specialized type of financing might be the best fit for you. If you need working capital or financing to fund a different kind of expansion, though, a business term loan may be a better fit.
2. Identify your collateral. Real estate, equipment, invoices or other physical or financial assets can serve as collateral. If you don’t have those kinds of assets and you’re not buying equipment or real estate, you may want to research unsecured business loan options instead.
3. Assess the value of your collateral. Your lender will likely determine how much your collateral is worth as part of the application process. But doing your own assessment ahead of time can help you understand your potential borrowing power.
For instance, 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. Understand your other qualifications. Banks, SBA lenders and online lenders will also consider other elements of your business loan application, like your credit history, time in business and annual revenue. Online business loans are generally easier to qualify for than business loans from banks, even if you’re securing the loan.
5. Compare secured business loans and apply. Consider lenders’ annual percentage rate ranges, application requirements like annual revenue and time in business, how long loans typically take to fund and other factors that are important to your business. Ultimately, the best secured business loan for you is the one that offers you the best terms at the most affordable rate.
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 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 with 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 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 they likely require collateral for financing over $50,000.
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.
Alternatives to secured business loans
If a secured business loan isn’t right for your business, consider these other types of financing:
- If you lack existing collateral: Unsecured business loans require you to sign a personal guarantee, and lenders may place a lien on your business. But you typically don’t secure these loans with physical assets. That said, 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.
- If you don’t have the credit history to qualify for a loan: Accounts receivable factoring is a type of funding in which you sell your company’s unpaid invoices to an intermediary. Because it’s not technically a loan — you’re selling an asset for cash — factoring companies don’t typically consider your credit history.
- If you’re just starting up: Business credit cards offer flexible financing to businesses of all ages. Like online business loans, business credit cards usually require you to sign a personal guarantee.
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 August 3, 2023
Methodology
NerdWallet reviewed both traditional and online lenders in order to create our list of the best secured business loans.
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 $100,000.
- Transparent rates and repayment terms.
- Personal credit score requirements of 720 or below.
- No more than three 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
Yes. Most business loans are minimally secured by a personal guarantee or UCC (Uniform Commercial Code), but can also benefit from pledging high-value collateral like property or vehicles.
Secured loans require some form of collateral, but the definition of collateral may vary by lender. Some lenders want physical assets like property, while others will secure the loan through a personal guarantee, or an SBA guarantee.