Economic Perspectives with Hopeton Hay on KAZI 88.7 FM in Austin, TX

Collateral – Financial Fitness for Small Business Tips

Posted by Hopeton on December 21, 2010

The purpose of the  Financial Fitness for Small Business Tips is to provide information that will help aspiring and existing small business owners be better prepared to finance the start-up and growth of their businesses in today’s economic environment.  The following tip was provided by Emerson Hall, Community Affairs Specialist for the Federal Deposit Insurance Corporation Dallas Regional Office.  For more information on the financial literacy resources provided by FDIC go to http://www.fdic.gov/consumers/education/.

Collateral are assets that have value and can be liquidated in the event of loan default;  and in most cases provides tangible security for the lender and investor upon extending funds to a business. Collateral provides the business owner the ability to pledge it’s assets as a secondary source of repayment in the event cash flow is unable to satisfy debt payments. Lenders and investors take some comfort in having collateral securing their funds in the event of non-payment. The collateral can be liquidated to cover some or all of the outstanding debt.

Collateral is normally a requirement to obtain financing for a business. If collateral is not available it does not automatically indicate lenders or investors will decline a request for funds, but having collateral does provide an enhancement for funding to be extended.

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One Response to “Collateral – Financial Fitness for Small Business Tips”

  1. […] more: Collateral – Financial Fitness for Small Business Tips Tuesday, December 21st, 2010 Uncategorized TAGS: better-prepared, business-tips, businesses, […]

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