What types of assets can I use as business loan collateral?

business loan collateral

As a small business owner, there are a few types of business loan products available on the market for you to choose from. Based on the assets you own, you can opt for a secured business loan or an unsecured business loan that you can get without providing the lender with any security in exchange.

Let’s find out what you can use as collateral to get a secured business loan from a CreditEnable lender partner.

What is business loan collateral?

“Collateral” is any asset that a lender will accept as security for a loan. There are many different types of assets you can use as collateral, and these may change depending on the type and purpose of the loan you apply for.

The collateral you put up acts as protection for the lender. It is a guarantee for them that you will repay the loan, and in instances when a borrower defaults on their loan, the lender can seize the collateral and sell it to recover their losses.

Depending on your financial needs, you can get a collateral-free business, also known as an unsecured business loan; or you can get a secured business loan in exchange for which you give the lender some collateral.

Why do I need to give lenders collateral for a business loan?

Lending involves considerable risk for the lenders. To reduce the risk involved for the lender and increase your chances of getting a business loan at favourable loan terms, you need to give the lender some collateral.

Sometimes based on the type of loan you need, the loan amount may vary depending on the valuation of the asset you put up a business loan collateral. This is common when you get a Loan Against Property when the lender assesses the value of your collateral and give you up to 70% of the current market value of your asset.

Apply for a Loan Against Property today!

What assets do lenders accept as business loan collateral?

When you apply for a secured business loan or a working capital loan, lenders will accept any form of immovable property as business loan collateral.

  • Immovable property (literally means property that can’t be moved) usually refers to any form of real estate intended for residential or commercial use and has a structure built upon it.
  • The immovable property can be currently in use by you or your tenants.
  • It must not have any ongoing property disputes linked to it.

Lenders do not generally accept land as collateral for a business loan.

Learn more about Immovable Property.

CreditEnable Tip:
When you use CreditEnable to apply for a business loan of up to Rs. 1 Cr, you do not have to provide business loan collateral if you get the total loan amount from multiple lenders.

What types of business loans can CreditEnable help me get?

CreditEnable is your friendly financial advisor and advocate. We’re want to help eligible SMEs across India easily access the business funding they need when they need it. And we do this using our award-winning lender-matching technology!

We partner with over 25 leading lenders in India, who offer the following loan products to our SME customers:

  1. Unsecured business loans
  2. Secured business loans
  3. Loans Against Property (LAP)
  4. Working capital loans
  5. Business machinery loans
  6. Overdraft or Cash/Credit facilities

Getting a loan using CreditEnable’s 100% digital and free service is easy. 

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Getting a loan using CreditEnable

Our lenders provide SMEs secured business loans at interest rates starting at 9%* and unsecured business loans at interest rates starting at 14%*.

Get your business loan using CreditEnable today!

Business Loans. Enabled Simply.

*The actual business loan interest rates that lenders offer you will depend on multiple factors, including your finances, credit and repayment history, business sector, and business vintage.