Hard Assets for Small Business Loan

Assets are very important in obtaining a small business loan. Business loans

are either secured or unsecured. Unsecured business loans have always

been difficult to get. In the current market, unsecured business loans,

especially for larger amounts, are virtually unavailable.

This leaves secured business loans. The security that is taken by lenders

are assets. What kind of asset is desired by lenders? The more liquid, the

better. Liquid means if, and how easily, an asset that is held by the lender

can be converted into cash by the lender. Banks like to get

certificate of deposits or listed stock for business loans as collateral because it

virtually assures the lender that the loan will be repaid to them even

if the customer cannot repay.

Most business owners don't have or don't want to give certificate of deposits or

listed stock as collateral for a business loan. If they have these types of assets,

and the business owner agreed to allow them to be pledged for a small business

loan, then they will not be available for future loans.

This leaves other assets such as accounts receivables, real estate with significant

equity, or equipment to use as assets for a business loan.