How to Use Real Estate or Commercial Equipment to Secure a Small Business Loan

By February 9, 2017business loans
Using real estate and equipment to secure a business loan

As small business loans become increasingly necessary for continued business growth and expansion, an increasing number of business owners are now exploring new ways to raise the capital that they need to keep moving forward. Using property, such as residential or commercial real estate (including raw land), or commercial equipment as collateral to secure a loan, is not new, but its usage saw a significant increase in recent years as banks significantly reduced their traditional lending activities to small businesses. Today, alternative lenders have opened up many new avenues to funding, with this method being one of them. For business owners with poor credit, revenue or other problems that might prevent them from getting a loan through other sources, using a collateral to secure the small business loan is an excellent way to quickly raise needed capital.

Typically, lenders look for sufficient equity in the collateralized property to determine the viability of the loan. The general formula is to establish the market value of the property, then deduct any outstanding liens, which leaves the equity amount as the remainder. The offered loan amount will be a percentage of the equity, which could result in small business loans of a few thousand dollars to a few million, again, depending on the property and the amount of equity that it has. If the loan offer is accepted by the borrower, then formalities such as a title search, and other investigations are made, usually to verify ownership and any existing liens against the property. After all the checks have been completed, and if there are no overwhelming issues that would prevent it, the agreement is finalized and the funds are deposited to the business owner’s account in a few days.

Since collateralized loans are generally used for short term funding, they can range from as little as 3 months to around 12-15 months. As the saying goes: “There are many ways to skin a cat”, and finding the right type of small business funding, regardless of the initial challenges and obstacles, is no different.


Fairfax Funding, LLC., is an Orlando-based alternative financing brokerage that focuses on helping small businesses and startup entrepreneurs to gain broader access to a wider range of funding options than are traditionally available. Visit for more details.