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Secured loan
Also called collateralised loan, collateralized loan.
Credit where the borrower grants the lender a security interest in identified property, giving the lender a direct claim on that property if the loan is not paid.
Drafted with AI assistance. Not yet independently checked. Nobody has verified the claims on this page against a source, so treat the figures and legal points as a starting point rather than as settled, and confirm anything you are about to act on. How we check things.
What it means
Two steps make it real. The security agreement creates the interest — it is the contract in which the borrower grants a lien and describes the collateral. Perfection then makes that interest effective against other creditors and a bankruptcy trustee, usually by filing a UCC-1 for business personal property, by recording a mortgage or deed of trust for real estate, or by taking possession or control for some asset types.
Collateral can be specific — this excavator, this vehicle, this piece of equipment — or blanket, covering substantially all business assets including after-acquired property. Equipment finance is normally specific. Bank lines, asset-based facilities and most advance agreements take blanket descriptions.
What security buys the lender is a remedy: repossession, foreclosure, collection of pledged receivables, or a priority claim on liquidation proceeds. What it buys the borrower is usually a longer term, a lower rate, or a decision that would otherwise be a decline.
Where this one catches people
Two words get confused. "Secured" tells you the lender has collateral; it says nothing about whether the borrower is personally on the hook, which is what a personal guarantee does, and the two travel together far more often than owners expect. Separately, an advance agreement that files a blanket UCC-1 is not thereby a secured loan — a filing does not turn a purchase of receivables into a loan, and it does not turn a loan into a fair one.
Where you will meet this term
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Secured loan — common questions
What does secured loan mean?
Credit where the borrower grants the lender a security interest in identified property, giving the lender a direct claim on that property if the loan is not paid.
Where does secured loan catch people out?
Two words get confused. "Secured" tells you the lender has collateral; it says nothing about whether the borrower is personally on the hook, which is what a personal guarantee does, and the two travel together far more often than owners expect. Separately, an advance agreement that files a blanket UCC-1 is not thereby a secured loan — a filing does not turn a purchase of receivables into a loan, and it does not turn a loan into a fair one.
Is secured loan the same as an interest rate?
Secured loan is defined above; if you are comparing it against a rate, check whether the two measures share a time dimension before you put them side by side.
Which products does secured loan apply to?
Term Loan, Business Line of Credit, SBA Loan, Equipment Financing, Asset-Based Lending.
Is there a worked example of secured loan?
Not on this entry. Where a term is arithmetic, the arithmetic is shown; this one is not primarily a calculation.
What else should I read alongside secured loan?
Blanket lien, Personal guarantee, Security agreement, Specific lien, UCC-1 financing statement.
Has this definition been checked?
Not yet. This entry is drafted and live, and the notice at the top says so. Confirm anything you are about to act on.
Is this legal advice?
No. It is a definition. What a clause does in your contract, in your state, is a question for a lawyer licensed where you are.
Can I suggest a term?
Yes — [email protected]. The glossary grows from what people are actually shown in contracts.