{"id":10781,"date":"2020-07-22T06:49:35","date_gmt":"2020-07-22T06:49:35","guid":{"rendered":"\/blog\/?p=10781"},"modified":"2020-10-21T11:51:53","modified_gmt":"2020-10-21T11:51:53","slug":"the-different-types-of-collateral-you-can-use-for-business-loans","status":"publish","type":"post","link":"https:\/\/tata-blog.osian.dev\/blog\/loan-for-business\/the-different-types-of-collateral-you-can-use-for-business-loans\/","title":{"rendered":"The different types of collateral you can use for business loans"},"content":{"rendered":"\n

Businesses,\nsmall or big, need capital to grow. A business loan is a handy source\nof financing that can be used to support any business need. <\/p>\n\n\n\n

A\nloan for business is available in different forms. You have unsecured personal\nloans, collateral loans, and then, term loans. However, a loan with a\ncollateral placement is among the most popular choices, especially for\norganizations in the MSME segment.<\/p>\n\n\n\n

By\navailing of a business loan with collateral, you can get a cheaper loan\ncompared to unsecured loans, and get larger funds sanctioned based on the value\nof the collateral.<\/p>\n\n\n\n

Here\nis a list of assets you can place as collateral for business loan: <\/p>\n\n\n\n

Real Estate<\/strong><\/h2>\n\n\n\n

Real\nestate is popular and preferred asset collateral for lenders as it retains its\nvalue over a period and is easy to liquidate in case of default. The collateral\ncould be a business property or a personal asset of the borrower. <\/p>\n\n\n\n

As\na borrower, you can get a high Loan-to-Value ratio (LTV) on a real estate\ncollateral. This is a good option when the fund requirement is large, say to\nbuy new machinery or expand the business.<\/p>\n\n\n\n

Additional Reads – <\/strong>How Machinery Loan Can Help You in Expanding Your Business Capacity?<\/a><\/p>\n\n\n\n

Investment, jewelry, and other valuables<\/strong><\/h2>\n\n\n\n

Personal\ninvestments such as stocks, mutual funds, bond investments can be used\nas collateral for business loan. Other assets such as gold jewelry, fine\nart and collectible antiques can be pledged too. However, with the value of\nsuch personal assets fluctuating frequently, the LTV, in this case, is usually\nlow at about 40% to 50% of the market value.<\/p>\n\n\n\n

Personal\ninvestments are an excellent option to fund short-term needs, such as stop-gap\nworking capital requirements.<\/p>\n\n\n\n

Machinery and other depreciating assets<\/strong><\/h2>\n\n\n\n
\"Machinery<\/figure>\n\n\n\n

Large, expensive machinery could be a crucial asset for a manufacturing set-up, but the purchase may end up blocking a huge part of your capital. The same asset can be used as\u00a0collateral for business loan. Similarly, other assets such as cars, vans\/trucks, loading-unloading machinery, etc. can also be pledged for a\u00a0machinery loan<\/a>. <\/p>\n\n\n\n

Again,\nthe LTV depends on the condition and age of the machinery as it is a\ndepreciating asset.<\/p>\n\n\n\n

Bills receivable<\/strong><\/h2>\n\n\n\n

As\npart of the business cycle, you might have to often extend a credit period to\nyour customers. This gap between delivering your product\/service and receiving\npayments can create operational difficulties.<\/p>\n\n\n\n

You\ncan offer these outstanding invoices as a collateral to a lender for an\ninstant business loan. With this, you can restock your inventory, pay your\nstaff and vendors and generate new business opportunities.<\/p>\n\n\n\n

Additional Reads – <\/strong>Benefits of using a Business Loan after Lockdown ends<\/a><\/p>\n\n\n\n

Inventory<\/strong><\/h2>\n\n\n\n

Sometimes\nthe situation might be such when the sales could be slow, and a large part of\nyour capital be stuck as inventory. This ready stock too can be used\nas collateral for business loan. With inventory financing, the LTV may\nvary heavily depending on the type of product, its popularity in the market,\ndurability, sales records, etc.<\/p>\n\n\n\n

In closing<\/strong><\/h2>\n\n\n\n

Depending on the nature of business and type of asset, there are several assets you could place as\u00a0collateral for business loan. You can easily apply for a\u00a0business loan<\/a> \u00a0online\u00a0through Tata Capital and find an affordable, customized loan that helps you take your business to greater heights.<\/p>\n\n\n\n

Apply now<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

Businesses, small or big, need capital to grow. A business loan is a handy source of financing that can be used to support any business need. <\/p>\n

Read More<\/a><\/p>\n","protected":false},"author":1,"featured_media":10784,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[26],"tags":[],"class_list":["post-10781","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loan-for-business"],"yoast_head":"\nVarious Types of Collateral you Can Keep While Availing a Business Loan - Tata Capital Blog<\/title>\n<meta name=\"description\" content=\"Getting a business loan for your business? Check out the collateral options you can keep for getting a business loan instant. 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