Secured Business Loans

SECURED BUSINESS LOAN FAQs

• What are the eligibility requirements? What kind of credit score do I need for an SBA loan? How long are loan terms?

  You probably have a few questions about getting started. Here are the answers to some frequently-asked questions asked by entrepreneurs and small-business owners just like you.

• What are the most common types of collateral for business loans?

  The kind of assets you put up will vary depending on the type of loan you take out. However, generally speaking, these are the types of collateral businesses use to secure their loans:

  • Property Borrowers put up home equity or real estate assets that the lender can seize if the borrower defaults
  • Savings Borrowers use the cash in their bank accounts as collateral; also known as “cash-secured” or “passbook loans”
  • Invoices Business owners can use unpaid invoices as collateral through invoice financing
  • Inventory As a business owner, you can put up as collateral your inventory–unsold goods and products that lenders can accept in the event you default on your loan
  • Equipment Secure your loan with new or used equipment
  • Blanket liens A comprehensive lien, a legal claim that allows lenders to to seize nearly any or every asset belonging to your business in the event that you cannot pay
  • Personal guarantee Business owners agree to put up as collateral their personal assets

• Who is eligible for a secured SBA Loan?

  Typically, SBA loans are approved by the lender. The approval process can take a variety of factors into account. Depending on the kind of loan for which your business is applying, the specific process will vary.

  For example, with a 7(a) loan of up to $350,000 (not including Express Loans), applicants’ credit scores are reviewed using the FICO® Small Business Scoring Service® product (SBSS). This process is to ensure consistency and objectivity in the approval process.

• How long are the loan terms? What about lines of credit?

  The SBA offers different term loans up to 25 years. The repayment term depends on whether it’s an equipment loan (i.e. machinery), working capital, or a commercial real estate loan.

  With a business line of credit, businesses have a draw period, generally of about 10 years, followed by a repayment period of about 20 years, during which they can no longer borrow.

• Should I get a business credit card, checking, or savings account?

  Take some stress and confusion out of running a business and consolidate your banking at one institution. Wasatch Peaks Credit Union membership gets you access to our other business services that can give your business an edge while helping you stay organized.

  A business checking account means you can take credit card payments from customers, offers liability protection, helps you monitor cash flow, and simplifies your taxes. Not to mention, you will need some place for your SBA loan to be deposited.

  Business credit cards and savings accounts are also a good idea to help you keep track of finances and to take advantage of benefits.

  A business credit card can also be a good route if you determine that a secured business loan isn’t right for your business right now. Unsecured business loans are relatively uncommon, so if you’re making smaller purchases on a short-term basis, credit cards can be the way to go.

• Who qualifies for Wasatch Peaks membership?

  At least one business partner needs to be a Wasatch Peaks Credit Union member to qualify for any of our business products and services.

  Residents, students, members of houses of worship, and individuals who work or volunteer in Weber, Davis, and Morgan counties are all eligible for membership.

  Take advantage of shared branching at over 30,000 ATMs around the country, as well as nearly 5,000 branches and more than 2,000 self-service locations.