A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan. The debt is thus secured against the collateral, and if the borrower defaults, the creditor takes possession of the asset used as collateral and may sell it to regain some or all of the amount originally loaned to the borrower.
Reasons why you might use a secured loan include:
- Establish a line of credit with no or subprime credit.
- Purchase new equipment to improve business operations.
- Investing in remodeling or renovating commercial space
- Planning long-term business expansion