Explore our guide to various Secured Business Loans Types. Whether you’re considering collateral-based options or seeking insights into secured financing solutions, we’ve got you covered.
BUSINESS LOAN TYPES
Below are your informational guide to all different types of Business Loans.
Unsecured Lines of Credit
Lines: $5K-$25K
Min Rev: $250K
Type: Revolving
Rates: Starting at Prime + 1-3%
Business Term Loans
Lines: $5K-$25K
Min Rev: $250K
Type: Revolving
Rates: Starting at Prime + 1-3%
Min Rev: $250K
Type: Revolving
Rates: Starting at Prime + 1-3%
Equipment Financing
Lines: $5K-$25K
Min Rev: $250K
Type: Revolving
Rates: Starting at Prime + 1-3%
Min Rev: $250K
Type: Revolving
Rates: Starting at Prime + 1-3%
Factoring
Lines: $5K-$25K
Min Rev: $250K
Type: Revolving
Rates: Starting at Prime + 1-3%
Min Rev: $250K
Type: Revolving
Rates: Starting at Prime + 1-3%
SBA Loans 7a / 504
Lines: $5K-$25K
Min Rev: $250K
Type: Revolving
Rates: Starting at Prime + 1-3%
Min Rev: $250K
Type: Revolving
Rates: Starting at Prime + 1-3%
Asset Based Lending
Lines: $5K-$25K
Min Rev: $250K
Type: Revolving
Rates: Starting at Prime + 1-3%
Min Rev: $250K
Type: Revolving
Rates: Starting at Prime + 1-3%
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Business Loan Types
Top Alternative Loan Types for Non-Bankable Borrowers
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1. Merchant Cash Advances (MCA) – Description: A lump sum of cash provided in exchange for a percentage of future sales, typically repaid daily or weekly based on credit card transactions. Quick and easy to obtain, but often with higher costs. – Who It’s For: Businesses with steady credit card sales but poor credit or limited collateral. |
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2. Invoice Financing (Factoring) – Description: Advances cash against outstanding invoices, providing immediate funds without waiting for customers to pay. The lender collects directly from the invoiced clients. – Who It’s For: Businesses with slow-paying clients and a need for quick access to working capital.
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3. Business Credit Cards – Description: Offers revolving credit up to a certain limit, ideal for covering everyday expenses or smaller purchases. They often come with rewards programs or introductory 0% interest rates. – Who It’s For: Small businesses looking to manage cash flow with a flexible and accessible credit option.
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4. Microloans – Description: Small loans, usually under $50,000, designed for startups or micro-enterprises. They typically have shorter repayment terms and higher interest rates than traditional loans. – Who It’s For: Startups or small businesses that need smaller amounts of capital and may not qualify for larger loans.
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5. Bridge Loans – Description: Short-term loans used to bridge the gap between a current need for funding and a future anticipated influx of cash. These loans are often used for real estate transactions or to cover temporary cash shortfalls. – Who It’s For: Businesses that need immediate funding to cover a gap while waiting for longer-term financing or sales proceeds.
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6. Revenue-Based Financing – Description: Provides funding in exchange for a percentage of future monthly revenue. Payments fluctuate based on the business’s performance, providing flexibility. – Who It’s For: Growing businesses with consistent revenue but limited access to traditional loans due to poor credit or lack of collateral. |
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7. Personal Loans for Business – Description: Personal loans used for business purposes, based on the borrower’s personal credit history rather than the business’s creditworthiness. – Who It’s For: Entrepreneurs or small business owners with strong personal credit but limited business credit history. |
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8. Collateral-Based Loans – Description: Loans secured by personal or business assets, such as property or equipment. The collateral reduces the lender’s risk, making it easier for borrowers with less-than-perfect credit to qualify. – Who It’s For: Businesses or owners with valuable assets willing to use them as collateral for lower interest rates or easier qualification. |
What is Secured Business Loan?
- Definition: Secured business loans are loans that are backed by collateral, which is an asset or assets that the borrower pledges to the lender as security for the loan. If the borrower defaults on the loan, the lender can seize the collateral to recoup their losses.
- Key Points:
- Collateral: Required, which can be real estate, equipment, inventory, accounts receivable, or other valuable assets.
- Risk: Lower risk for lenders because they have a way to recover their funds if the borrower defaults.
- Interest Rates: Generally lower compared to unsecured loans due to the reduced risk for the lender.
- Eligibility: Easier to qualify for if the borrower has valuable collateral to pledge.
- Examples: Secured loans can include mortgages, equipment loans, and asset-based financing.
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Factoring |
Small SBA Loans |
Large SBA |
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Credit Score |
Credit Score |
Credit Score |
Credit Score |
Credit Score |
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Time in Business Any |
Time in Business |
Time in Business |
Time in Business |
Time in Business |
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Monthly Revenue |
Monthly Revenue |
Monthly Revenue |
Monthly Revenue |
Monthly Revenue |
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Loan Amount |
Loan Amount |
Loan Amount |
Loan Amount |
Loan Amount |
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10% – 25% |
7% – 15% |
8% – 36% |
<10% |
7% – 18% |
| Benefits: Perfect credit not required. |
Benefits: Low APR, Fixed or variable rate. Start Up Financing. Commercial property financing. low down payment. |
Benefits: Lowest interest rate to buy equipment than MCA ,Tax deductible and depreciation benefits, Own the equipment outright. Monthly payment. |
Benefits: Lowest interest rates of all types, Longer terms, Can borrower larger amount. |
Benefits: Investment 4+ Unit Commercial Real Estate is still booming. Earn equity on property, Built in collateral |
| Drawbacks: Customer may rather deal directly with business, Depending on the situation can be a higher cost. |
Drawbacks: Longer application process, Require a personal guarantee or collateral and down payment. |
Drawbacks: Equipment can become outdated. Higher down payment for bad credit. No early payoff discount. |
Drawbacks: Application is time consuming, Long time to approval and funding, Down payment required. |
Drawbacks: LTV is never 100%. Must include plans to build a structure. Longer application process. |
| Apply Now | Apply Now |
Apply Now | Apply Now | Apply Now |
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Invoice |
Full financial package + year-to-date financials |
1-2 years tax returns (only if request is over $75,000 |
3 years tax returns |
Borrower Financial Statement (PFS) |
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AR Aging Report |
680 FICO score |
650 FIco |
personal financial statement |
Personal Tax Return(s) |
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P&L |
higher requirements. Net worth is a must. |
3 months business bank statements |
year-to-date financials |
Business Federal Tax Return(s) |
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One (1) year tax return (most recent)’Six (6) months Bank Statements |
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Invoice or Quote for equipment to be financed |
and FICO score 650 |
Business Financial Statement(s) |
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Interim Balance Sheet (Partial Year) |
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Notes Payable Schedule |
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Projections |
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Rent Roll (Investment or Multi-Family Commercial Real Estate) |
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Appraisal(s) |
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Environmental Site Assessment(s) |
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Site Visit / Pictures |
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Survey(s) |
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Title Policies |
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- 619-795-3123
- info@libertycapitalgroup.com
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