Secured finance

Business loans that use assets you own as collateral are known as secured business loans. A lender can take ownership of the asset if you fail to repay the loan, thereby reducing its risk. Therefore, you will generally get better terms, such as a lower interest rate and the ability to borrow a larger amount. Most loans are secured by commercial or residential properties, but lenders may also accept equipment or other assets.

A secured business loan may be the ideal choice if you are an established business owner, you own equipment or valuable assets, and you need a large amount of money.

If you aren’t able to use an asset as security for a business loan, you may want to consider an unsecured loan.

If you use an asset as collateral for a business loan, the loan is secured by the residual value of the asset. While this may allow you to get funding on more favourable terms, you may also forfeit the asset if you cannot make on-time loan repayments.

The assets most commonly used to secure a business loan are: • Commercial property • Residential property

If you wish to use your property as security for a business equity loan, it is not necessary to own the property outright, as you can access the equity you have in your personal or business property.

Other assets may be available to you depending on the lender and the amount of the loan.

Other assets to secure a business loan include: • Vehicles • Fine art • Business equipment • Appliances and valuable musical instruments

If you wish to borrow a particular amount, you’ll need to meet specific criteria determined by the lender. Generally, the following requirements must be met:

• Business history. Most lenders will require you to have been in business for a specified minimum period, such as six months.

• Business financial strength. Your business’ average monthly turnover, profit and loss statements, as well as income projections, will be considered by lenders in determining your repayment capacity.

• Asset requirement. For the amount you wish to borrow, you must have a suitable asset (or assets) as security.

Before applying, make sure you are aware of all the necessary requirements for the loan you are applying for or speak with one of the friendly team members at Monteus to make sure you understand all your options.

If your company is having difficulty managing its cash flow because of a few outstanding invoices, invoice financing might be an option for you to consider. This is a business loan that is secured by unpaid invoices and has a low risk, no asset requirements, and no interest payments.

Other Options also include secured business overdrafts.