A Collateral Business Loan: What Is It?
Collateral business loans are secured loans that employ commercial real estate as security to lower the lender’s risk and, thus, lower the loan amount. Small business owners usually qualify for more finance since the funding is secured, as opposed to revenue-based financing that isn’t backed by “hard” assets.
Collateral business loans from $50,000 to $250,000 are available from Main Street Finance Group, with no usage limitations. The value and kind of collateral given, your company’s cash flow, and the owner’s credit history, personal background, and repayment record will all have a major role in determining the terms of your collateral business loan. Main Street Finance Group only accepts developed property that is not the primary residence of the business or property owner as collateral because we never want to jeopardize someone’s primary place of residence.
Rates for Collateral Business Loans
Instead of using a standard interest rate, the majority of alternative company funding options employ something called a factor rate. Factor rates are straightforward decimal numbers that indicate how much "extra" you will have to pay over the loan's original amount. Your risk assessment is the basis for calculating your factor rate. Factor rates typically range from 1.1 to 1.5.
For whom is a collateral business loan appropriate?
Business loans with collateral are best for:
- Companies with short-term, low-cost capital requirements
- Companies looking for a bigger or more permanent source of capital than a small company loan or merchant cash advance
- Companies investing heavily in items like new machinery or increased stock
- Companies preparing to grow, merge, or purchase
Medical facilities, manufacturing facilities, car dealerships, construction firms, business services, and more can all profit from collateral business loans. Regardless of the sector you work in, our knowledgeable finance Advisors will collaborate closely with you to determine the optimum finance solution that will enable you to meet your objectives without compromising cash flow.
How to Obtain a Business Loan with Collateral
Utilize
Collect three months' worth of bank statements and other documentation. Give us secure access to the transactional data from your bank account so we can approve it more quickly.
Select Funding
Within an hour (during regular business hours), a financing advisor will get in touch with you to finish your application and go over your funding alternatives.
Obtain Money
Within a day of deciding whatever funding option is best for your company, you and your funding advisor can authorize and deposit your funds.
Decide on Repayment
Your company's debit and credit card sales on a daily or weekly basis will be automatically subtracted to cover payment. The amount of your payment will depend on your sales.
How to use business loans with collateral
The application of collateral business loans is unrestricted. Usually, collateral loans are most useful for:
- Finance expansion plans, new machinery, and other expensive yet very profitable purchases
- Fund a business purchase, merger, or expansion
- Use seasonal business possibilities to your advantage by buying inventory in bulk.
Qualification Requirements for Collateral Business Loans
Compared to other alternative funders and traditional lenders, Main Street Finance Group has less stringent requirements for collateral business loans. Since credit ratings don’t always reveal the complete picture, we at Main Street Finance Group concentrate on the property’s and your company’s overall health.
Here are some things we take into account:
- Type of collateral: main houses are not accepted as collateral
- The value of the collateral, as shown by the real estate schedule, county tax bill, and most current property appraisal
- Revenue for businesses
- Money movement
- Payment history of the vendor
- Years of operation
- Public documentation
Q&A for Collateral Business Loans
As collateral, we will accept developed property that is not the principal dwelling of the business or property owner. Your principal residence will not be accepted as collateral by us.
Yes, we provide funding across Canada. Find out more about Canadian alternatives for funding small businesses.
Collateral loans can provide funding in as little as five to ten business days. Consult a Funding Advisor for additional details.
The size of the loan you’re looking for determines how much collateral you’ll need for a business loan.