Business Loan Collateral: What Lenders Accept & When It's Required
Collateral is an asset you pledge to secure a loan. If you default, the lender can seize it. Here's what you need to know about collateral requirements.
Michael Chen, CFA
Business Finance Expert
Updated February 2, 2026 • 10 min read
Types of Collateral Lenders Accept
Real Estate
Commercial property, residential property (for SBA loans). Most valuable collateral type.
LTV: 70-80%
Equipment & Vehicles
Machinery, trucks, manufacturing equipment. Self-collateralizing for equipment loans.
LTV: 50-80%
Inventory
Raw materials, finished goods, work-in-progress. Value depends on liquidity.
LTV: 50-70%
Accounts Receivable
Outstanding invoices from creditworthy customers. Common in factoring.
LTV: 70-90%
Collateral Requirements by Loan Type
| Loan Type | Collateral Required? | Personal Guarantee? |
|---|---|---|
| SBA 7(a) Over $25K | Usually Yes | Yes |
| SBA 504 Loans | Required | Yes |
| Bank Term Loans | Often Yes | Usually |
| Online Term Loans | Often No | Sometimes |
| Equipment Financing | Equipment = Collateral | Sometimes |
| Business Line of Credit | Depends | Usually |
| Merchant Cash Advance | No | Sometimes |
Unsecured Business Loans (No Collateral)
Some financing options don't require collateral:
- Business credit cards
- Online short-term loans (higher rates)
- Merchant cash advances
- SBA Microloans under $50K
- Unsecured lines of credit (strong credit required)
Note: Unsecured loans typically have higher interest rates and may still require a personal guarantee.