Collateral

Collateral lowers a lender's risk, so secured financing often costs less or comes in larger amounts. It can be specific, such as the equipment a loan buys or the invoices a factor purchases, or general, such as a blanket lien on all business assets.

The claim is usually made public with a UCC-1 filing, or for real estate with a recorded mortgage or deed of trust.

Many small-business products lean on revenue more than collateral. For 7(a) Small Loans of $50,000 or less, the SBA does not require collateral. Merchant cash advances rest on your future receivables and usually a UCC filing rather than specific assets. Whatever the product, read what the security agreement covers before you sign.