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BUSINESS FINANCING · CANADA & USA
Secured Business Loans
Use eligible assets to support business financing, with a clear view of repayments and collateral obligations.
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What is a secured business loan?
A secured business loan is backed by agreed collateral, such as equipment or other eligible business assets. Collateral supports the financing request; cash flow must still support repayment. Assessment considers asset value, existing claims against those assets and the business’s financial position.
Illustrative example: A manufacturer owns machinery and wants to improve its premises. A secured loan review considers the machinery’s accepted value, existing debt and repayment capacity. The equipment’s purchase price alone does not establish how much can be borrowed.
What can you finance?
Business investment
Connect the amount requested to a documented project and the cash available for repayment.
Operating cash requirements
Discuss whether assets can support the request without creating a payment burden the business cannot carry.
Debt restructuring
Compare total cost, existing payout requirements and the implications of granting new security. A refinance is not automatically a saving.
Start with repayment capacity, then assess the security
Collateral supports a loan; it does not replace cash flow
A secured business loan involves assets supporting the borrowing obligation. The review still needs to establish how payments will be made from the business. Owning valuable equipment or other property does not automatically make a request affordable. Explain the purpose, expected benefit and repayment source alongside the proposed collateral so both parts of the request can be assessed together.
Illustrative example: value is not usable equity
A business estimates an asset is worth $100,000 and owes $40,000 against it. The $60,000 difference is a simple equity estimate, not an approved borrowing amount. An independent valuation, saleability, existing claims, financing costs and the proposed agreement may lead to a different usable amount. Avoid planning a purchase around the full estimate before the security and repayment position have been reviewed.
Identify the asset and its role in operations
List ownership, location, condition and any existing finance against the asset. Explain whether it is essential to daily operations and whether it could be sold without disrupting the business. Security creates consequences if obligations are not met. Consider those consequences as part of the financing decision rather than focusing only on whether offering an asset may change the pricing.
Who can qualify for secured business loans?
The business should be able to document ownership, asset condition and any existing liens, together with its financial position and proposed use of funds. Available equity and lien priority can affect the structure.
Available options depend on your business location in Canada or the USA. Include the province or state, transaction currency and any cross-border activity in your request.
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The process, step by step.
Review the request
Provide the requested documents and clarify the costs, structure and conditions of any proposal.
Complete agreed conditions
If approved and you choose to proceed, complete the agreement and required conditions before funds are disbursed.
What should you compare before proceeding?
Collateral scope
Clarify whether security covers selected assets or a broader group of business property.
Priority & releases
Identify existing security and any consent, payout or discharge requirements.
Default provisions
Understand enforcement rights and any guarantees. Pledged assets may be at risk if obligations are not met.
Prepare the information behind a secured request
Ownership and existing obligations
Provide records supporting ownership and identify loans, leases or other claims affecting the proposed collateral. A financed asset may already be subject to security. The new arrangement may require coordination or a payout, and those steps can affect the funds left for your project. Do not assume that physical possession alone establishes clear ownership or an unrestricted ability to pledge an asset.
Value, condition and insurance
Depending on the asset and arrangement, a valuation, inspection or insurance evidence may be requested. Purchase cost, book value and realizable value can differ substantially. Explain major repairs, specialized modifications or a limited resale market. Ask what valuation basis is used and who pays related costs so the budget reflects more than the principal amount being considered.
Business records and jurisdiction
Recent financial information, bank activity and a debt schedule help connect collateral with payment capacity. Identify the legal entity, province or state and the location of the assets. Cross-border ownership or assets held by another company may require additional review. Canada and USA availability should not be interpreted as identical security procedures or documentation in every jurisdiction.
Questions to resolve before granting security
Specific assets or broader business security?
Ask precisely what the agreement covers. Security may relate to named assets or extend more broadly, depending on the structure. Find out whether future assets, replacements or proceeds are included and whether consent is needed before selling or refinancing property. These details can affect later business decisions even when the initial purpose is a single purchase or operating expense.
Security and a guarantee are different
A security interest concerns assets; a personal guarantee creates a separate potential obligation for the guarantor under its terms. One does not necessarily exclude the other. Ask who is required to sign, the scope of the obligation and the circumstances in which it can be enforced. Obtain appropriate independent advice on documents you do not understand before committing business or personal assets.
Compare net benefit, not just the rate
Include valuation, documentation and other applicable costs when comparing secured and unsecured proposals. Check the payment schedule, early-repayment conditions and steps for releasing security after repayment. If an existing loan must be paid out, deduct that amount when calculating usable proceeds. A lower headline rate is not enough to establish that a new arrangement improves the business’s overall position.
What happens when you want to sell a financed asset?
Review the agreement before arranging a sale or trade-in. A security interest may need to be released, and a payout may be required from the proceeds. Ask for the current settlement amount and the steps needed to document the release. Do not assume the remaining accounting balance equals the amount required to settle. If you intend to replace the asset, discuss that plan before committing to the new purchase. The timing of the sale, settlement and replacement should be coordinated so the business does not lose essential equipment or assume that financing automatically transfers to another asset.
Secured Business Loans compared with other options
Compare
Secured Business Loans
Unsecured Business Loans
Asset-Based Lending
Primary purpose
Business borrowing supported by assets
Eligible costs without specific primary collateral
Liquidity supported by eligible assets
Repayment / cash flow
Contractual loan payments; collateral supports obligations
Contractual payments; guarantees may still apply
Availability and repayment governed by facility terms
Main review focus
Repayment capacity, asset value and priority
Cash flow, credit and existing commitments
Borrowing base, collateral and reporting
Costs to compare
Net proceeds, interest or financing charges, fees and total repayment
Net proceeds, interest or financing charges, fees and total repayment
Net proceeds, interest or financing charges, fees and total repayment
General comparison only. Availability, security and final conditions vary by business, product and location. On smaller screens, scroll the comparison horizontally.
Explore your industry
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9 industries · Swipe, scroll or choose a group below.
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Explore industry →Frequently asked questions
Does valuable collateral guarantee approval?
No. Review also considers repayment capacity, existing obligations, ownership, valuation and transaction requirements.
Can an asset with an existing loan be used?
Possibly, but available equity, lien priority and required consents need assessment.
How does this differ from ABL?
A secured term loan may have scheduled repayments. ABL commonly links ongoing availability to eligible collateral and reporting; compare the actual agreements.
What if my assets already secure another facility?
Existing security can affect borrowing capacity and priority. Provide current facility agreements and payout balances. A new arrangement may require consent, repayment or an agreement between financing providers; the same asset value cannot simply be counted twice.
Is this available in Canada and the USA?
Mehmi accepts financing enquiries from businesses in Canada and the United States. Include your province or state, business activity and transaction currency. Available structures and requirements vary by location and request.
What should I compare before accepting an offer?
Compare the total amount payable, upfront cash, payment frequency, security, personal guarantees and early-settlement terms. Check what happens at the end of the agreement and whether the payments remain manageable in a slower month.
Financing guides for your next step.
CANADIAN FINANCING GUIDE
Secured Business Loans Canada Qualification Guide
Explore the considerations, documents and contract questions for this financing topic.
Read article →CANADIAN FINANCING GUIDE
Secured vs Unsecured Business Loan Canada
Explore the considerations, documents and contract questions for this financing topic.
Read article →Tell us what your business needs.
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Apply for financingFinancing is subject to application review and approval. Availability, costs, terms and documentation vary by business, product and location. This page provides general information and is not a financing offer.