Secured Business Line of Credit: Complete Guide

A secured business line of credit is a revolving credit account backed by collateral—equipment, inventory, real estate, or even cash deposits. You draw what you need up to your approved limit, pay interest only on what you've borrowed, and reuse the credit as you repay.

Apply Now

Key Distinction: Secured lines require assets as backing and typically offer lower rates and higher borrowing limits than an unsecured business line of credit that relies on creditworthiness alone.

By pledging collateral, you reduce the lender's risk. That often makes secured lines more accessible to newer businesses or those rebuilding credit. Your credit limit usually reflects the value of those assets, minus a safety margin the lender keeps.

The Real Advantages for Your Business

Running a business means facing unpredictable cash flow. A seasonal slowdown hits. A client payment arrives late. Equipment breaks at the worst time.

A secured line may give you breathing room without rigid monthly payments. You borrow what you need when you need it, then repay on your schedule as revenue picks back up.

Real Scenario: A lawn care company uses its fleet of trucks as collateral to secure a $75,000 line. During winter, the owner draws $20,000 to cover payroll and maintenance. In spring, revenue rebounds, the balance is repaid, and the full line is available again.

Think of it as safety net financing. You're not paying interest on funds sitting idle. You're only charged for what you've actually drawn. That may work well if your income swings seasonally or if you need occasional cushion for large orders. Consider pairing your line with business credit cards for smooth day-to-day expenses.

How to Decide if a Secured Line is Right for You

Start by looking at what you own. Do you have equipment, vehicles, commercial property, or inventory with measurable value? That's your potential collateral.

Now consider the risk. If repayment falls behind, the lender can claim the pledged asset. That makes your repayment plan non-negotiable. Can you tie repayment to predictable revenue? Are you pledging something your operations can't run without?

Business stage matters too. If you're newer with limited credit history but solid assets, a secured line may be easier to obtain than an unsecured business line of credit.

Established businesses often use secured lines to manage short-term working capital while keeping longer-term projects on separate financing. If you're expanding into property, explore commercial real estate financing alongside your line.

Ask yourself: Will I track draws and balances regularly? Do I have a clear plan for repaying before the next slow period?

Next Steps: Building Your Financing Plan

You don't need to figure this out alone. At Broadview, we start with your cash flow, your collateral options, and your timeline before we discuss terms. Whether you're considering a cash secured business line of credit backed by savings or an equipment-backed line, we'll walk you through the tradeoffs in plain language.

Stop by your local branch or reach out online to start the conversation. We'll review your assets, discuss your goals, and help you decide whether a line fits your plan.

For additional support, many small businesses explore government options such as SBA loans that may complement your financing strategy.

Choosing the Right Lender

Not every lender structures secured lines the same way. National banks may offer competitive pricing but often favor established businesses with strong financials and substantial collateral. Community banks and credit unions may take a relationship-based approach, weighing your business story alongside your statements.

Compare the full cost, not just the advertised rate. Fees, minimum draw requirements, and maintenance charges change what you actually pay. Some lenders conduct annual reviews that can adjust secured business line of credit rates or limits after an asset revaluation.

Here's what to ask: Can you provide a fee schedule? What would it cost to borrow $10,000 for six months? Do you conduct annual reviews that might change my terms?

Relationship banking matters. A lender who understands your cash cycle and checks in before a tight month may be more helpful than one who only reacts after a problem starts. At Broadview, we focus on building that kind of long-term partnership.

Apply Now

Frequently Asked Questions

What is a secured business line of credit?

A secured business line of credit is a flexible way for your business to access funds when you need them. It's a revolving credit account, meaning you can borrow, repay, and borrow again up to a set limit. What makes it "secured" is that it's backed by assets your business owns, like equipment or real estate. This often helps you get lower interest rates and higher borrowing limits.

Can an LLC get a business line of credit?

Yes, absolutely! If you operate your business as an LLC, you can certainly apply for a business line of credit. Lenders look at your business's assets and credit profile, regardless of its legal structure, to determine eligibility. Having collateral can make this option more accessible for many businesses, including LLCs.

How do payments work with a secured business line of credit?

A secured business line of credit works differently from a traditional loan when it comes to payments. With a line of credit, you only pay interest on the amount you actually draw, not the entire approved limit. Payments typically involve the interest on your drawn balance, plus any principal you choose to repay. This offers more flexibility than a fixed monthly loan payment.

What kind of assets can I use to secure a business line of credit?

You can use a variety of business assets to secure a line of credit. Common examples include equipment, inventory, or commercial real estate your business owns. Sometimes, even accounts receivable or cash deposits held in a savings account can serve as collateral, which is often called a cash secured business line of credit.

How does having collateral help my business get a line of credit?

Pledging collateral significantly reduces the risk for lenders, which is a big help for your business. This often translates into more favorable terms for you, like lower interest rates and potentially higher borrowing limits. It can also make a secured line of credit more accessible, especially for newer businesses or those working to improve their credit history.

What do lenders look for when I apply for a secured business line of credit?

While your EIN is important for identifying your business, lenders also look at several other factors for a secured line of credit. They'll assess the value and type of collateral you're offering, as this directly impacts your borrowing limit. We also consider your business's overall credit profile and your plan for repaying the funds, ensuring it aligns with your predictable revenue.

^{Last reviewed: March 2, 2026 by the Broadview Team}