How does a secured business loan work?

A secured business loan is a type of loan that is secured by collateral, such as real estate, equipment, inventory or other assets. The collateral serves as security for the lender, which reduces the risk of the loan and makes it easier for the borrower to obtain financing.

When a borrower applies for a secured business loan, they will need to provide information about the collateral they are using to secure the loan. The lender will then evaluate the collateral to determine its value and assess the risk associated with the loan. If the collateral is sufficient to cover the loan amount, the lender will approve the loan and disburse the funds to the borrower.

The borrower will then make regular payments on the loan, which typically include both principal and interest. If the borrower is unable to make the payments, the lender can seize the collateral and sell it to recover their losses.

Secured business loans are typically easier to obtain than unsecured loans, since the collateral reduces the lender's risk. However, they also come with the risk of losing the collateral if the borrower defaults on the loan.