When a lender asks 'what can you put up?' they're asking about collateral—the assets they can seize and sell if the loan isn't repaid. Understanding what qualifies, how much borrowing power it actually creates, and what liens get filed against your business is the difference between walking into a financing conversation prepared or blindsided. This guide covers the mechanics most articles skip.
What Actually Counts as Collateral
Collateral falls into a few broad buckets, and lenders treat each differently based on how easily it can be sold and how stable its value is.
- Commercial real estate — The strongest collateral. It holds value, is hard to hide, and has an established resale market. This is why commercial real estate loans and SBA 504 loans can offer long terms and lower rates.
- Equipment and vehicles — Machinery, trucks, medical devices, and manufacturing lines. Value depreciates, so lenders discount heavily. In equipment financing, the equipment itself is the collateral, which simplifies approval.
- Accounts receivable — Unpaid customer invoices. Highly liquid if your customers are creditworthy, which makes receivables attractive for invoice factoring and lines of credit.
- Inventory — Raw materials and finished goods. Discounted steeply because it can be hard to sell quickly and may be perishable, seasonal, or obsolete.
- Cash and savings — Occasionally used to secure a loan or line, valued near dollar-for-dollar.
- Personal assets — Home equity, personal vehicles, or investment accounts, typically brought in through a personal guarantee rather than pledged directly.
How Lenders Value and Discount Collateral
The single most important concept here: lenders never assume they'll get full value in a fire sale. They apply an advance rate (the percentage of an asset's value they'll lend against) and think in terms of loan-to-value (LTV). If you have equipment worth $100,000 and the lender advances 60%, you can borrow $60,000 against it.
The discount exists because forced liquidation is messy. Selling seized equipment fast means accepting below-market prices, plus the lender eats storage, legal, and auction costs. The gap between market value and advance amount absorbs those losses.
| Asset type | Typical advance rate | Why the discount |
|---|---|---|
| Commercial real estate | 65% – 80% | Stable value, strong resale market |
| New equipment | 60% – 80% | Depreciates but has resale demand |
| Used equipment | 40% – 60% | Faster value loss, narrower buyer pool |
| Accounts receivable | 70% – 90% | Liquid if debtors are creditworthy |
| Inventory | 20% – 50% | Hard to sell fast, may be obsolete |
These are typical ranges, not guarantees—each lender sets its own and adjusts for your industry, the asset's age, and market conditions. A lender may also order an independent appraisal, especially on real estate and specialized equipment, and use that number rather than your estimate.
▦Estimate your term loans paymentsRun the numbers in the term loans estimator →▸UCC Liens and Blanket Liens Explained
When you take a secured loan, the lender files a UCC-1 financing statement with your state to publicly record their claim on the collateral. This is standard and expected. It doesn't appear on or hurt your personal credit, but it is a public record that other lenders can see.
There are two flavors that matter:
- Specific UCC lien — Ties to a defined asset, like a particular piece of equipment or your receivables. Clean and contained.
- Blanket lien — Covers all business assets: equipment, inventory, receivables, and cash, present and future. It gives the lender the broadest possible claim.
The practical problem with a blanket lien is that it ties up everything. If you later want a second loan or a line of credit, the new lender sees your assets are already encumbered and either declines or takes a junior (second) position—which most avoid. This is one reason stacking multiple financings gets complicated fast.
Collateral by Loan Type
Different products lean on collateral in different ways.
- SBA 7(a) loans — The SBA doesn't decline a loan solely for lack of collateral, but lenders will take available collateral up to the loan amount, often including a lien on business assets and sometimes personal real estate. A personal guarantee is required from owners of 20% or more. See our SBA loans guide for the full picture.
- SBA 504 loans — Used for real estate and heavy equipment; the financed asset itself is the primary collateral.
- Term loans — Business term loans may be secured or unsecured depending on size and your profile. Larger amounts almost always require collateral.
- Equipment financing — Self-securing: the equipment is the collateral, so you rarely pledge additional assets.
- Invoice factoring — Your receivables are effectively the collateral, sold to the factor rather than pledged.
- Revenue-based financing — Typically no specific collateral; repayment is tied to a share of future sales.
Financing Options When You Have Little or No Collateral
A thin balance sheet doesn't shut you out—it just shifts which products fit. Lenders that can't rely on assets rely on cash flow, revenue history, and credit instead, usually at higher cost to offset the risk.
- Revenue-based financing — Approval hinges on consistent monthly revenue, not assets. Repayment flexes with your sales.
- Unsecured term loans and lines — Available to businesses with solid credit and cash flow; expect higher rates and shorter terms than secured options.
- Invoice factoring — If you invoice creditworthy customers, your receivables do the heavy lifting, no equipment or real estate needed.
- Startup capital — For newer businesses without established assets, options often lean on the owner's personal credit and a personal guarantee.
The trade-off is real: less collateral generally means higher pricing, smaller amounts, or shorter terms. But it's often better to pay more for capital you can actually get than to chase a low rate you can't qualify for.
How EQ Funding Fits In
Collateral requirements vary widely from one lender to the next—one may demand a blanket lien while another funds the same business unsecured based on cash flow. That variation is exactly why comparing offers matters. EQ Funding is a marketplace, not a lender: you submit one application, and we route it to lenders who compete to fund your business. You see the collateral terms, liens, and pricing side by side and choose what fits.
Before you apply, know what you're willing to pledge and what you'd rather keep unencumbered. That clarity helps you weigh a secured offer with a lower rate against an unsecured one that keeps your assets free for future borrowing. Both can be right—it depends on your plans.