Secured Line of Credit

A line of credit backed by a hard asset which can be real estate and/or the business's accounts receivables, equipment, inventory or credit card receivables. Normally, lenders will loan up to 70 percent to 90 percent of the value of the asset. Typically, these lines are extended as part of a business acquisition, when a business needs more than $250,000 and/or is less than 2 years old. In the cases where real estate is involved, the closing costs can be around 2 percent to 3 percent of the loan amount (includes cost of appraisals, title search as well as any mortgage taxes levied by respective states). General documents required include the last 2 years of business and personal tax returns, certificate of incorporation, filing receipt, tax ID papers and personal financial statements.