Your Business Has More Collateral Than You Realize
Most small business owners assume they don’t have collateral—not because they’re being modest, but because nobody ever explained what actually counts.
And honestly? Traditional finance doesn’t help.
Words like “pledged assets” and “secured lending” make it sound like you need:
A commercial building
A warehouse full of machinery
A 200-page appraisal
And maybe a monocle
So business owners shrug and say, “Yeah, I don’t have any of that,” and end up thinking their only financing options are high-interest, short-term, or just plain limiting.
But here’s the plot twist:
Most businesses have more collateral than they realize.
Real, usable, lender-friendly collateral. (Not theoretical assets or wishful thinking.)
You might not own a fleet of trucks or a giant facility, but you do own things lenders care about. And those things can unlock better terms, lower rates, and a lot less stress.
Let’s break down what collateral actually is, and why your business might be far more “fundable” than you’ve been told.
First: What Collateral Really Means (Plain English Edition)
Collateral is simply something your business has that holds value and reduces risk for a lender.
That’s it.
There’s no secret handshake.
The more stable your assets, the easier it is for a lender to offer:
Longer terms
Lower payments
Larger loan amounts
Better programs (instead of the “desperate times call for desperate funding” category)
Collateral isn’t about losing your assets.
It’s about using your assets strategically.
1. Inventory: The Most Overlooked Asset in Small Business
If you sell physical products, congratulations, you already have collateral.
Inventory is valuable because:
It’s tangible
It can be counted
It can be appraised
It already cost you money to produce or purchase
Whether it’s apparel, auto parts, cosmetics, supplements, or the 6 pallets of back-ordered holiday items still haunting your warehouse, lenders recognize inventory as a stable asset.
2. Accounts Receivable: Yes, the People Who Owe You Money Count
If customers regularly pay you on terms (Net 15, Net 30, Net 60), your outstanding invoices are collateral.
This is why A/R financing and lines of credit exist.
Because lenders know:
Those invoices usually get paid
Payment patterns are predictable
You shouldn’t have to wait 90 days to fund payroll or buy materials
Your receivables are an asset. They just feel invisible because they’re stuck in someone else’s accounting department.
3. Contracts & Recurring Revenue: Predictability Is Power
One of the most valuable forms of collateral in modern lending isn’t physical at all; it's consistency.
If your business brings in steady revenue through:
Monthly retainers
Memberships
Subscription services
Maintenance contracts
Service agreements
…then lenders view that as a stable asset.
Predictable revenue is a huge risk reducer.
It tells lenders your business isn’t built on vibes and wishful thinking.
4. Equipment: More Than Just Heavy Machinery
You don’t need cranes or excavators to have equipment worth something.
Collateral-worthy equipment includes:
Kitchen equipment
Medical devices
Manufacturing tools
Vehicles
Specialty equipment
Commercial appliances
If it’s essential to your operations and has measurable resale value, lenders care.
Even better: equipment financing often lets you borrow against equipment you already own…not just new purchases.
5. Real Estate: Business or Personal
This one’s obvious but still overlooked.
Any of the following can be used as collateral in certain types of financing:
Business-owned property
Investment properties
Owner-occupied commercial buildings
Sometimes even personal real estate (depending on program)
Real estate may not be required, but when it exists, it opens doors.
6. Intellectual Property: The Serious Kind, Not Your “Million-Dollar Idea”
Certain types of IP can count as collateral, depending on the lender and industry. For example:
Patents
Trademarks
Proprietary formulas
Software
Intellectual property with actual commercial value
No, not your “future viral app idea.” But real, revenue-generating IP? Absolutely.
7. Revenue Itself: The Most Common Form of Modern Collateral
Here’s something nobody tells business owners:
A lot of financing today is “secured” by the strength of your revenue—even if no physical assets are pledged.
This includes:
SBA loans
Term loans
Revenue-based financing
Merchant cash advances (not ideal, but yes, they use future revenue as collateral)
If you have reliable income, lenders see that as a form of security…even without traditional collateral.
Why Underestimating Your Collateral Costs You Money
When business owners assume they “don’t have collateral,” they usually end up:
Borrowing short-term
Overpaying in interest
Taking smaller amounts
Using products designed for emergencies instead of growth
Missing out on loans with real structure
If you only take funding that treats you like a high-risk borrower, you get high-risk borrower terms.
But if you understand the assets you actually have, you qualify for programs that support:
Expansion
Hiring
Stabilization
Debt consolidation
Cash flow smoothing
Better financing isn’t just about getting approved. It’s about getting approved on terms that don’t choke your business.
Bottom Line: You Probably Have More Collateral Than You Think
Most small business owners are not “asset-poor.”
They’re asset-unaware.
If you have:
Inventory
Receivables
Equipment
Contracts
Recurring revenue
Real estate
Or even just consistent sales history
…then you have collateral.
And that collateral can unlock financing options you probably assumed were out of reach.
The key is recognizing your assets for what they are, not what you used to think collateral had to be.
If you’re suddenly realizing your business has been sitting on collateral this whole time… welcome to the club.
Most owners underestimate their borrowing power until someone spells it out.
If you want to see what your assets can actually do for you (and which financing options you’ve been leaving on the table), book a call with Credit Banc.
Worst case? You spend 15 minutes learning something new.
Best case? Your financing gets a whole lot cheaper.
