Secured business loans use collateral to reduce lender risk, potentially unlocking more attractive rates and terms. Collateral can include cash deposits, business assets or real estate.
| Lender | Best for… | Max. loan amount | Term length | Min. interest rate | Min. credit score | Time in business | |
|---|---|---|---|---|---|---|---|
 | Traditional bank | Starting at $25,000 | Up to 60 months | 7.25% | Not disclosed | 24 months | See secured business loan offers |
 | Online term loans | $500,000 | 6 to 84 months | 11.29% | 660 | 24 months | See secured business loan offers |
 | Lines of credit | $1,000,000 | 12 months (with annual review) | Prime + 0.50% (subject to a 5.00% minimum) | Not disclosed | 24 months | See secured business loan offers |
 | Long-term loans | $5,000,000 | Up to 300 months | Prime + 3.00% | 680 (recommended) | 24 months (recommended) | See secured business loan offers |
 | Equipment financing | $150,000 | 24 to 60 months | Not disclosed | 600 | 6 months | See secured business loan offers |
| Loan amounts | Starting at $25,000 |
| Starting interest rate | 7.25% |
| Term length | Up to 60 months |
| Minimum credit score | Not disclosed |
| Minimum time in business | 24 months |
In-person customer service and expert insights
Occasionally offers reduced introductory rates and waived fees
Free rewards program for business members
Doesn’t disclose maximum rate ranges
Not ideal for startups
Must have $250,000 in annual revenue to qualify
With over 6,000 branches nationwide, Bank of America is an excellent choice for businesses looking for a traditional bank experience and in-person support. Funding options include secured term loans and secured business credit lines starting at $25,000. While interest rates start low, term loans include a 0.50% origination fee of the total loan amount, and at least $150 in upfront and renewal fees for lines of credit.
Going with a traditional bank has certain advantages, such as access to business bank accounts, in-person appointments, personal loans for business and free rewards programs. However, startups should look elsewhere since Bank of America requires a two-year business history, plus an annual revenue of at least $250,000 to qualify.
| Loan amounts | $25,000 to $500,000 |
| Starting interest rate | 11.29% |
| Term length | 6 to 84 months |
| Minimum credit score | 660 |
| Minimum time in business | 24 months |
Flexible repayment terms
Dedicated account manager to help your business succeed
Fast funding times
A personal guarantee is required
Doesn’t report payments to all credit bureaus
Not all industries are eligible
Funding Circle is an online lender offering competitive secured business term loans ranging from $25,000 to $500,000. With a streamlined application process, you could receive funds as quickly as two business days after approval. Funds can be used for a range of business purposes like covering payroll, inventory, hiring staff, renovations and more.
Funding Circle also offers funding options for women-owned businesses and minority entrepreneurs. In addition to pledging collateral, any owner with at least a 20% stake in the company must sign a personal guarantee.
| Loan amounts | $100,000 to $1,000,000 |
| Starting interest rate | Prime + 0.50% (subject to a 5.00% minimum) |
| Term length | 12 months (with annual review) |
| Minimum credit score | Not disclosed |
| Minimum time in business | 24 months |
Revolving funds for short- and long-term expenses
High funding amounts
Monthly interest-only payments
Must have $2 million in annual revenue to qualify
Charges a 0.50% origination fee, due on an annual basis
Doesn’t list credit score criteria
The Wells Fargo Prime Line is a secured business line of credit designed for high-earning companies with at least $2 million in annual sales. Secured by non-real estate business assets, businesses can borrow up to $1,000,000 as needed for short-term working capital expenses or long-term projects — only paying interest on withdrawn amounts.
As a traditional bank, Wells Fargo offers a wide range of small business solutions, including business bank accounts, business credit card rewards, merchant services and tailored support. There are also more than 7000 Wells Fargo locations nationwide in case you need in-person support.
| Loan amounts | $50,000 to $5,000,000 |
| Starting interest rate | Prime + Prime + 3.00% |
| Term length | Up to 300 months |
| Minimum credit score | 680 (recommended) (recommended) |
| Minimum time in business | 24 months (recommended) |
Capped interest rates
Long repayment terms
A range of funding amounts available
Processing times typically take longer than other types of business financing
A high credit score is recommended
Business must be physically located and operating in the U.S. or U.S. territories
Business owners needing access to higher loan amounts and longer repayment terms can consider an SBA loan, such as the popular SBA 7(a) or SBA 504 loans. Borrowers unable to qualify for traditional funding might have better luck getting an SBA loan since the U.S. Small Business Administration (SBA) guarantees a portion of the funds, helping minimize lender risk.
SBA-secured loans start at $50,000, although lower amounts might be available without providing collateral. You can find an SBA lender through a traditional bank, credit union or online lender. Businesses with a FICO Score of 680 or higher tend to have higher chances of approval.
| Loan amounts | $3,000 to $150,000 |
| Starting interest rate | Not disclosed |
| Term length | 24 to 60 months |
| Minimum credit score | 600 |
| Minimum time in business | 6 months |
Quick funding times
Equipment acts as collateral so no down payment required
Offers a Lowest Payment Guarantee
Not ideal for purchases over $150,000
Annual revenue of $250,000 or higher needed to qualify
Lack of transparency regarding interest ranges
Companies needing to acquire or upgrade heavy equipment or machinery can access up to $150,000 with National Funding’s equipment financing and leasing. With a low minimum credit score of 600 and only six months business history required, this is a great option for startups or those looking for a bad credit equipment loan.
Business owners can enjoy competitive rates with National Funding’s Lowest Guarantee Program — if you find a lower equipment leasing price with a competitor, you could receive a $1,000 cash bonus (reasonable restrictions apply). However, you may need to look elsewhere if your equipment purchases will exceed $150,000.
A secured loan is a type of small business financing where the borrower pledges collateral to help minimize lender risk.
Collateral is typically an asset that the lender can seize if you default on the loan. For small businesses, assets like equipment, cash savings or real estate will often serve as collateral for secured business loans.
Since the collateral acts as a guarantee for the funds, startup businesses and businesses with bad credit may have better success obtaining a secured business loan over an unsecured loan.
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Here are six steps to get a secured business loan.
1. Calculate how much you need
Review your business budget to estimate what you need to cover essential purchases for your company. Also take into account whether you need the funds all at once or spread out over time. Although secured loans typically offer lower interest rates, you could end up paying more if you opt for a longer repayment term.
Use our business loan calculator to estimate how much you could borrow.2. Evaluate your business qualifications
Review each lender’s general business loan requirements online, such as minimum credit score, annual revenue and collateral requirements. While alternative lenders typically have more lenient qualification requirements for secured business loans, you’ll likely pay higher rates than with traditional financing.
It’s a good idea to check your credit scores before applying to know your eligibility options. Boosting your credit score in advance could help you qualify for more competitive offers.
3. Choose your collateral
Collateral requirements vary by lender and loan type. In general, you could pledge equipment, real estate, invoices or financial assets as collateral for business loans. If you can’t meet the lender’s collateral requirements, you may want to consider unsecured business loans instead.
4. Compare secured business lenders
You can apply for secured business loans via traditional banks, credit unions or online lenders. Pay attention to hidden fees since these extra costs can jack up the overall cost of your loan. Also, make sure the lender reports on-time payments to the major credit bureaus so you can keep building your business credit.
You can read small-business lender reviews before applying to find the best options for your needs.
5. Gather required documents
Lenders typically require certain documents during the application process. While the exact documents will vary, here’s a general idea of what you’ll need:
6. Apply and review
Most secured business loan applications can be completed online, but some lenders might require a phone call or in-person visit. Secured business loans typically take longer to approve and fund since the lender must review your assets. For example, it can take months to receive your funds after being approved for an SBA loan, although you can reduce this timeline to two weeks by working with an SBA-preferred lender.
Make sure to review all loan offers to ensure you understand the rates, repayment term and additional fees.
Both secured and unsecured business loans exist. With a secured loan, you’ll need to pledge collateral, such as property or cash. An unsecured loan doesn’t require collateral, but as a tradeoff, it may come with higher interest rates and lower borrowing limits.
Compared to unsecured loans, secured loans may be more likely to be approved because the required collateral reduces the risk to the lender. But, because the collateral will need to be appraised, it may take longer to get your funds.
Getting a startup business loan with no money can be challenging since most lenders want to see a steady source of revenue with a business history of two or more years. However, some lenders are willing to lend to new businesses when collateral is included since this reduces their overall risk. Online lenders such as National Funding or Taycor Financial offer secured loans for businesses less than a year old.
Yes, you may be eligible to get a secured business loan with bad credit. If you have a lower credit score, providing collateral may be a way to reduce your risk to lenders. For example, Taycor Financial offers equipment financing to business owners with credit scores as low as 550.
The timeline for applying for a business loan varies based on the lender and loan type. In general, online business loans have quick processing times, allowing you to receive a decision within minutes. Often, the funds are deposited on the same day or within a few business days. In comparison, an SBA or traditional bank loan is more time-consuming, with funding times lasting up to 90 days.