Collateral is an asset a business pledges so the lender can claim it if the debt is not paid. A Steamboat Springs, CO business can pledge equipment, vehicles, unpaid invoices, inventory or cash on deposit; with no asset pledged, an unsecured offer rests on cash flow and credit instead. Funding partners decide what they accept.
Collateral can be equipment, vehicles, receivables, inventory or cash. Unsecured offers lean on deposits, time in business and credit, and may still include a personal guarantee. A lien can cover one item or every business asset; read which before signing.
What lenders accept as collateral
Collateral is anything of value the business agrees the lender can take and sell if payments stop. The asset stays in use; the lender holds a claim on it until the debt is paid. What a funding partner can accept depends on the product and the partner:
| Asset | How it secures the debt | What a partner can look at |
|---|---|---|
| Equipment and vehicles | A claim on the specific item | Age, condition, resale value, the title |
| Unpaid invoices (receivables) | A claim on what customers owe | Who owes it and how long it has been unpaid |
| Inventory | A claim on goods on hand | How readily the goods could be sold |
| Cash on deposit | A claim on a held account | The balance kept in the account |
A partner may lend less than an asset is worth, leaving a cushion in case it has to be sold. Illustration only, invented figures: on equipment valued at $60,000, an offer at 80% of value comes to $48,000, leaving a $12,000 cushion.
Land and buildings can be collateral too, but property-secured lending is outside this site. The business loans page lists the products this site does cover.
When no asset is pledged: how unsecured offers are judged
With no asset pledged, a partner judges the business itself. It can look at monthly bank deposits, time in business, existing loans, leases and advances, and business and personal credit. A steady deposit history can carry more weight here because there is nothing to sell if payments stop.
Read an unsecured offer closely. It can still ask the owner for a personal guarantee, a promise to pay the debt personally if the business does not, and it can include a general lien on business assets. The agreement says which, so "unsecured" describes the offer only after both are checked.
For a sense of business size here: in Routt County, CO, 1,277 of the 1,860 employer establishments had fewer than five employees in 2023, a 68.7% share (County Business Patterns).
Unsecured options here include working capital and a line of credit; each partner decides whether to make an offer.
Equipment as collateral for its own loan
Equipment financing secures itself: the machine, vehicle or furniture being bought is the collateral, so the business may not need to pledge anything else. If payments stop, the claim covers that item. A partner can still ask for a down payment, a personal guarantee, or both.
Illustration only, invented figures: two offers for $35,000 over 36 months, one secured by the equipment at an annual rate of 9.5% and one unsecured at 15.5%. The secured payment is $1,121.15 ($40,361.40 in all); the unsecured one is $1,221.87 ($43,987.32 in all). In this illustration the unsecured offer costs $3,625.92 more in interest. Real rates depend on each partner’s review.
The equipment financing page compares loans and leases, and the term loan page covers a fixed amount repaid in level installments.
Liens and what they cover
A lien is the legal claim that comes with collateral. It can be specific, naming one item such as a loader by its serial number, or general, covering every business asset: equipment, inventory, receivables and accounts. For business assets the lien is made public with a filing called a UCC financing statement, which other lenders can search.
- Ask whether the lien is on one item or on all business assets
- Ask whether a personal guarantee comes with the offer
- Check what liens are already on file before a new request
- At payoff, ask for the lien to be released and the filing ended
A general lien already on file can affect a later request, because a new partner’s claim on the same assets would rank behind the earlier one. Paying off or releasing old liens before applying keeps the picture clear.
To talk through what a request could rest on, call Mapleshore Financial or send the request form.
By Mapleshore Financial · Updated
