Most people think that business loans are all unsecured loans. However, it is possible to obtain secured business loans that can offer better loan terms than regular business loans with little risk for the borrower and for the lender.
Secured business loans are becoming more and more common among businessmen as small companies begin to own their own commercial offices and headquarters instead of renting. Thus, they can take advantage of real estate by obtaining finance through secured loans. But, they can also use as security their future sells, thus obtaining finance with alternative forms of collateral.
Real Estate Based Business Loans And Lines Of Credit
There are business loans that are secured with real estate properties just like regular mortgage loans and home equity loans. The sole difference is that these properties belong to a company instead of a particular person. Nevertheless the concept is just the same: the property’s value guarantees repayment of the money to the lender and thus reduces the risk of the transaction letting the lender offer lower interest rates and more advantageous loan terms.
Loans And Lines Of Credit Based On Future Sells
Finally there are also loans and lines of credit that are based on the future sells of the company. These financial products work as follows: The financial institution processes credit card payments for the company that wants to borrow money and thus, knows exactly the average income of the company in terms of credit card payments. Thus, the financial institution will be able to lend money in the form of a loan or line of credit and agree loan installments or minimum payments that will be withdrawn directly from the amount of money the financial institution gathers from the credit card sells.