What Is a Business Equity Loan?

A business equity loan uses the assets you have acquired for your business as collateral for financing. This is a form of secured debt financing designed to help you grow your business, overcome a slow business cycle or meet other financial demands. There are several advantages to a business equity loan over other forms of financing.

Save Money with Secured Debt

When you secure a debt with collateral, it is less risky for the lender. This allows the lender to offer you better loan terms. Namely, your interest rate will be lower with a secured loan than with an unsecured loan. You may also have more flexibility with your payment options. Since you are only risking a business asset, if you default your personal assets will be protected.

Improve your ROE

Return on Equity is one of the measures of financial health of a business. It answers the question, "how well does this business put its assets to work?" When you have a number of illiquid assets, it is essential to put them to work to make you more money in order to continually expand your operations. In business, if you are not growing, you are shrinking. Use your assets to help you achieve growth.

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