A Griffin, GA business can pledge equipment, receivables and inventory as collateral, and a funding partner can also ask the owners for a personal guarantee. What stays off the table depends on the agreement, so it has to be read before signing. Land and buildings are outside what Valestead Lending Group arranges; it sends requests to funding partners, who set any collateral terms.
The business assets a partner can take as collateral, with an invented example of how each one counts, what to ask an attorney about personal pledges, the trade-offs of unsecured funding, and lien releases.
Equipment, receivables and inventory as collateral
An asset pledged to secure repayment is called collateral. For business funding arranged through Valestead, it is a business asset, and the partner counts each asset at less than its full value, because selling it would take time and cost money.
| Asset | Value in this example | Advance share | Amount it supports |
|---|---|---|---|
| Equipment, at appraised value | $180,000 | 70% | $126,000 |
| Receivables under 90 days old | $64,000 | 80% | $51,200 |
| Inventory, at cost | $90,000 | 40% | $36,000 |
| Total | $334,000 | $213,200 |
In this example, $334,000 of assets supports $213,200 of funding. Equipment counts for the most because a machine with a serial number and a used market is easy to value; receivables count once they are checked for age and for customers who pay; inventory counts for the least, since stock can spoil, go out of style or sell for less in a hurry.
Which asset matters depends on the trade. Spalding County, GA had 56 wholesale trade establishments and 243 retail trade establishments in 2023 (CBP, NAICS 42 and 44-45). A wholesaler that sells on invoice terms holds much of its value in receivables; a store holds it on the shelves; a plant holds it in machines, which is where equipment financing secures the loan with the machine it buys.
Personal assets and what to ask counsel
When business assets do not cover the amount, a partner can ask the owners to back the loan personally. That can mean a personal guarantee, a pledge of savings or investments, or a lien on other property the owner holds. Each one puts the owner's household, not only the business, behind the debt.
These are signatures to review with an attorney before signing. Questions worth bringing:
- Is the guarantee limited to a dollar amount or a share of the loan, or is it unlimited?
- Does it cover only this loan, or every future debt to the same partner?
- Does a spouse have to sign, and what does that commit the spouse to?
- What events let the partner call on the guarantee before the business misses a payment?
- How and when is the guarantee released after the loan is paid?
Valestead does not arrange loans on land or buildings; this article covers what a funding partner can ask an owner to pledge for business funding.
Unsecured options and their trade-offs: notes for Griffin, GA owners
Unsecured funding pledges no specific asset. That suits a service business, a law office or a clinic with few machines and steady deposits. The trade-offs come with it: amounts sized to revenue and bank history rather than to assets, shorter terms, a higher cost of money, and, where a partner asks, a personal guarantee anyway.
An unsecured line of credit covers short gaps and refills as it is repaid; a term loan on a larger project can be secured by the assets it buys. Some unsecured loans still come with a general lien filing on business assets, which matters to the next lender that looks. The funding types page lays the options side by side.
Liens and releases after repayment
A secured lender records its claim by filing a UCC-1 financing statement. It can name specific equipment, or it can be a blanket lien over all business assets, including those bought later. Anyone checking the business, from a new lender to a buyer, can search those filings by the business's legal name.
- Before borrowing, run a lien search on the business name to see what is already filed.
- When the loan is paid off, ask the lender for a payoff letter and a UCC-3 termination of its filing.
- Search again a few weeks later to confirm the termination was filed.
- For a vehicle, check that the lender's name comes off the title.
- Keep the termination and the payoff letter with the loan file; a buyer or new lender can ask for them.
An old filing left in place can slow down the next request even after the debt is gone. The other articles are on the Valestead blog, and an owner who knows what the business can pledge can start on the request form.
By Valestead Lending Group · Updated
