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Before a lender issues you a loan, it wants to know that you have the ability to repay it. That's why many of them require some form of security. This security is called collateral, which minimizes the risk for lenders by ensuring that the borrower keeps up with their financial obligation.
Property that can be used for business loan collateral includes real estate, equipment, inventory and vehicles. These are all tangible hard assets that could be owned by the business or the business owner, or have loans against them.
The collateral serves as a security measure for the lender. If you fail to make payments, your lender typically can take possession of the collateral as payment for the loan.