Secured Business Line of Credit: What You Pledge, What a Lien Covers and What Is at Risk
A business line of credit backed by named business assets, usually receivables or inventory.
Soft credit pull only, no obligation
Rates, factor rates, fees and terms are set by the funding provider that makes your offer and are disclosed in that provider's agreement. Figures on this page are illustrative ranges from providers in our network, not offers.
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- Subject to provider approval and document turnaround.
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At a glance
| Typical amount | $10K–$5M, depending on the funding provider |
|---|---|
| Speed | same-day decisions from some providers, subject to provider approval and document turnaround; a secured file usually takes longer |
| Minimum time in business | 12 months, considered by some providers |
| Minimum monthly revenue | $15,000, considered by some providers |
| Credit considered from | 525, considered by some providers |
| Collateral and guarantee | Named assets, often alongside a general lien; a personal guarantee is commonly required |
| Cost expressed as | A rate or a fixed cost of funds on the drawn balance, plus any fees, depending on the funding provider |
| What is pledged | Most often receivables and inventory, depending on the funding provider |
No rate appears on this page, and no promise that collateral lowers one. Some providers consider applications at these minimums. Meeting a minimum does not guarantee an offer.
What securing a line of credit means
Definition
A secured business line of credit is a revolving facility backed by named business assets, pledged under a security agreement that is normally filed publicly.
The filing is public: before making an offer, the next provider searches it to see what is already claimed.
What is pledged?
Short-term business assets, most often receivables and inventory.
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Some providers take equipment, titled assets or a deposit account.
Specific or general?
A specific pledge names assets; a general (blanket) lien claims them as a class.
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Both are usually recorded on a UCC-1 financing statement, and a general lien is common even on lines nobody calls secured.
What is at risk?
The pledged assets, if the line is not paid under the agreement you signed.
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A personal guarantee is commonly required as well.
What ends the lien?
Paying the balance to zero does not remove the filing by itself.
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When you close the line, ask the provider to file a UCC-3 termination statement, and check the record afterwards.
How much a secured line can reach
With collateral pledged, the limit is usually a share of the provider's own valuation of it, sometimes called a borrowing base, and can be recalculated as receivables and inventory change.
The limit offered follows
- The collateral's value
- Your deposits
- Your credit profile
- Existing filings
Secured or unsecured?
Secured
Good collateral can support a larger limit; slower to open, and the limit can move with the collateral.
Unsecured
Sized on deposits and credit; a general lien is still possible.
Unsecured business financing explains what that word does and does not promise.
Two habits that help any file
Find out what is already filed against the business before you apply.
Pledge what the limit needs, not everything the business owns.
Decisions from some providers the same day, depending on the provider.
Subject to provider approval and document turnaround.
What a secured line costs
Priced on the drawn balance, not the limit; collateral can add costs of its own.
A rate on the drawn balance
Accrues on what is outstanding.
Paying down early stops the cost accruingA fixed cost of funds
A total cost stated at signing.
Paying down early frees the limit, not cost
On top of either, depending on the funding provider
- Draw fee
- Monthly maintenance fee
- Filing fee
- Valuation or inspection fee
Depending on the funding provider, a line may have no draw fees; all fees are disclosed in your offer before you sign.
Compare offers on the limit, the cost unit, every fee and what the security covers.
Read the agreement firstAn illustrative secured line
Illustrative example, not an offer. A distributor pledges its receivables and inventory. The provider values both, sets a limit and files a security interest. The business draws to pay suppliers and repays when its customers pay. If the line is not paid, the provider can collect those receivables.
Who qualifies for a secured line of credit
| 12 mo | time in business |
|---|---|
| $15K | monthly revenue |
| 525 | credit score |
Plus three months of bank statements (four in CA, NY, FL and GA with some providers), a government ID and schedules for the collateral.
Some providers consider applications at these minimums. Meeting a minimum does not guarantee an offer.
What strengthens a file
Collateral is one input among several.
Deposits that repeat.
No negative days, no overdrafts.
Readable collateral.
Current receivables, spread across customers.
A clean filing record.
A prior lien can block a new one.
Owner's guarantee.
A personal guarantee is commonly required.
How to apply for a secured line of credit
We check your options with a soft credit pull only, so looking does not change your score.
What you'll send
- three months of bank statementsfour in CA, NY, FL and GA with some providers
- A government ID
Pledged collateral adds
- A receivables aging
- An inventory list
- Equipment details
Worth asking before you sign
What exactly is pledged, and what does the filing cover? Does the provider report to business credit bureaus? Capital Gurus reports to none.
Apply once
about 5 minutesThe limit you want and what you would pledge. One file reaches the providers that fit.
Send your documents
Statements, ID and the collateral schedules.
Review the file with a specialist
We check what is already filed against the business.
Compare, then read the security
Weigh each offer on:
- Limit
- Cost unit
- Every fee
- What is pledged
- What the filing covers
The provider you sign with makes the credit decision and opens the line.
When pledging assets fits, and when it is the wrong move
It fits a recurring gap backed by assets that turn over. Collateral does not cure negative days or stacked positions.
| Ask yourself | Good use | Not for |
|---|---|---|
| Does the gap recur? |
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| Is the collateral the business? |
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Does the gap recur?
- Stock and trade receivables in wholesale or manufacturing, turning over every cycle.
Is the collateral the business?
- A larger limit than an unsecured file supports, with assets to spare.
- Pledging everything the business lives on. Nothing is left if it goes wrong.
Better fit elsewhere
- Receivables are the whole storyUse insteadInvoice factoringbuilt directly on the invoices
- The asset is the pointUse insteadEquipment financingwhere the machine secures its own deal
- A newer businessUse insteadA line for a new businesswhat is possible early
What is pledged, what the filing covers and what the provider can do if the line is not paid are set out in the security agreement you sign.
Compare with other lines of credit
If a pledge is not the question you need answered, start from one of these.
- Business line of credit overview
How any revolving line works: draws, cost on the drawn balance, and how an unsecured limit is sized.
- Business line of credit for new businesses
What is realistic before year two, when time in business shapes the limit more than collateral does.
Related financing
- business term loans
A fixed amount, repaid on a schedule you can put in the budget.
- working capital financing
Cash for payroll, stock and the gaps between deposits and bills.
Can an LLC or a sole proprietor pledge business assets?
Yes; entity type is rarely what decides. The assets must belong to the business, and the legal name, address and EIN must match across the application and the bank account. Where business and owner share assets, read the schedule.
business line of credit requirementsSecured line of credit questions
In short
A secured line is a business line of credit backed by named business assets, usually receivables or inventory, that the provider can claim if the line is not paid. Providers in our network consider $10K–$5M, depending on the funding provider, priced as a rate or fixed cost of funds on the drawn balance, plus fees. Collateral review adds time.
What is a secured business line of credit?
A line of credit where you pledge named business assets as collateral. Providers usually ask for short-term assets: receivables or inventory. The pledge is written into a security agreement and filed publicly, so other providers can see what is already claimed against the business.
What can be used as collateral for a line of credit?
Most often accounts receivable and inventory, because they turn into cash on roughly the same timetable as the line. Some providers also take equipment, a deposit account, or titled assets such as vehicles. What a provider accepts and how it values it sit in your agreement.
What is a general lien on business assets?
A filing that claims all business assets rather than one named item. It is common even on lines not described as secured, which is why "unsecured" rarely means nothing is claimed. It sits ahead of later providers and can block further financing.
Is a secured line of credit cheaper than an unsecured one?
This page cannot tell you that. Pricing is the funding provider's decision and is disclosed in its agreement. Collateral is one thing a provider weighs, but the rate, the fees and the limit still depend on your file and its guidelines. Compare the offers you actually receive.
What happens to the collateral if the line is not paid?
The provider can enforce the security agreement and claim the pledged assets: collect pledged receivables, claim pledged inventory. That is the real cost of securing a line, and why the pledge deserves to be read as carefully as the price. A personal guarantee is commonly required as well.
Does pledging collateral make approval easier?
Not automatically. Providers still read deposits, credit and time in business. Some providers in our network consider credit from 525, depending on the funding provider. Meeting a minimum does not guarantee an offer, and a secured file often takes longer because the collateral is reviewed and filed.
How large can a secured line of credit be?
Providers in our network consider lines from $10K–$5M, depending on the funding provider. Where collateral is pledged, the limit is usually tied to its value as the provider measures it, with a margin held back. Revenue, credit and time in business still set the ceiling before the collateral does.
What is a UCC-1 filing, and how is it removed?
A UCC-1 financing statement is the public notice a provider files with the state to record its security interest. It names the business and describes the collateral, either named assets or all assets. Paying the line off does not erase it: the provider files a UCC-3 termination statement, and you can ask for one when the line closes.
Still have a question?
talk to a funding advisorPut receivables and inventory to work: see which secured line offers fit your business.
about 5 minutes, soft credit pull only · talk to a funding advisor