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Collateral is assets pledged by a company to secure a loan. In the situation of a mortgage loan, the house would be the collateral for the loan. This gives the bank some security in case the borrower is unable to make payments on the loan. In this case, the bank would be able to sell the house to get some or all of the money back that they had loaned out.

Promissory notes play a large role in the pledging of assets to a bank or other funding source. A collateral note is a promissory note secured by the pledge of specific company assets. Basically, when a business signs a promissory note while receiving funding, they are promising to pay back the loan on a certain time table earlier agreed upon. To guarantee this note, they use company assets as collateral. The pledging of assets gives the bank some security if, for some reason, the borrower is unable to make payements. In this case, the bank is able to seize and/or sell the pledged assets to gain back some or all of the money they lent out.

To find the right funding source for you business you should try running a capital search through businessfinance.com. We have over 4000 lenders and brokers in our directory who are ready and willing to fund a business that qualifies for their type of funding. When you run a capital search, you simply fill out a few forms providing some information about your business. You will then be given a list of lenders whose criteria you match 100%. You can choose to contact these lenders yourself or sit back and wait to see if they contact you. This service is completely free, so run a capital search to receive your matched list today!


Search for Small Business Loan Sources and receive your matched lender listSearch for Small Business Loan Sources