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Secured Debt

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What is Secured Debt?

When a company that takes on debt puts up collateral on the capital received to protect an investment, it is called secured debt. Secured debt ensures that in the event a startup is unable to repay the loan, the collateral can be liquidated to satisfy their remaining commitment. Secured debt is attractive to lenders because the likelihood of losing money on the deal is much lower than with unsecured debt.

Secured Debt Examples

Examples of benefits secured debt:

  • Example 1. Borrowers usually enjoy lower interest rates
  • Example 2. Lenders enjoy a less risky investment
  • Example 3. Building mortgage is an example of collateral that might be used for secured debt.

Here’s another web page about secured debt.

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