Loans backed by collateral (assets such as property, equipment, inventory, cash, IP, receivables). In case of default, the lender can seize the asset.
Contract types:
- Loan agreement with security interest
- Fixed or floating charge over specific assets
Usual terms:
- APR: 4% – 20%
- Period: 1 – 10 years
- Amount: 10k – 10M+ (€ or £); amount depending on the value of the assets
- Repayments: Fixed monthly payments (amortising or interests-only)
- Collaterals: Property, equipment, vehicles, inventory, or receivables. The cash in bank can also be pledged. The IP can also be used (patents, software, etc.)
Usual eligibility criteria:
- Minimum annual revenue: 250k+ (€ or £); proven cash flow
- Valuable assets with resale value (property, inventory, etc.) to secure the financing
- Profitable or breakeven or clear repayment ability
- Acceptable credit history (e.g., no recent defaults)