Collateral

A lender may require a convincing business plan, evidence that repayments are affordable and collateral: an asset it can take if the borrower fails to repay. A successful established business may find it easier to demonstrate reliability than a start-up with no trading record, but approval is not guaranteed.

The lender may require collateral, such as business property, which is at risk if the business fails to repay.

Some lenders also require collateral. Even if the business initially makes few sales, it must meet its agreed repayments and interest costs.