How Collateral Can Work for Your SaaS Company
Before a lender issues a loan, it requires some form of security to know you have the ability to repay the loan. This security is called collateral.
Collateral is defined as an item of value used to secure a loan to minimize the lender’s risk. It is an asset that may take the form of real estate, mortgages, car loans, savings, or investment accounts that a lender can seize and sell to recoup losses if a borrower defaults on the loan. Today SaaS Lenders are using the repeatable revenue lines as collateral against loans.
Loans secured by collateral typically have lower interest rates than unsecured loans.