Loans can be either secured or unsecured. An unsecured loan does not require any form of security, other than a signature and credit reputation. However, most loans require larger security, including some or all of the business assets.

There are many different types of security:

  • Co-maker – A co-maker enters the loan with the borrower and is liable for the repayments.
  • Guarantor – A guarantor is someone who signs a note to improve the borrower’s credit, thereby making themselves liable for the borrower’s debt incase he/she fails to pay up. The endorser might also be asked to provide additional security. Most commercial loans require a guarantor before approval of a loan.
  • Warehouse receipts
  • Real estate
  • Accounts receivable
  • Savings accounts
  • Life insurance
  • Stocks and bonds