Too Much Collateral! 4 Ways to Stop Lender Asset Hoarding

A lender has approved a business loan, but they want too much collateral.

Consider 4 ways to push back.  Make your case and keep as much as you can.

Apply below for either bank statement loans that do not need your assets or only take the minimum amount required.

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Call 919-771-4177 for more info.

Make sure you’re covered, not just the lender!

How to keep a lender from taking too much collateral:

    • Ask about collateral requirements.
    • Don’t offer all of your assets upfront.
    • Negotiate the requirements. 
    • Negotiate lien releases during the loan.

1. Ask for all collateral requirements the lender has before  you apply

Finding out during the loan process that the lender wants collateral you don’t have or don’t want to offer is too late, and a waste of time.   Ask before you apply.

2.  Don’t offer all of your Assets up front. 

Do not voluntarily give the lender a full asset listing without their request.  You may be required to provide a listing of you assets later.   First give a general description and total valuation such as on a short form personal financial statement.

This prevents the lender from automatically asking for, then taking all of your assets as security for the transaction.      Don’t give the lender something valuable they did not ask for and require upfront.   If you do, then there is a good chance you gave away assets to them.   Compare their loan offer to the value of your assets.   Calculate the loan to value, or LTV.

3. Negotiate the assets required 

Many lenders will automatically take the most and best collateral you have, even if it may not be required to cover the lender’s money.   Banks, Savings and Loans, and the SBA do this commonly.   Many will take 5 to 10 times as much collateral as they need just because they said they wanted it.  This contradicts what is expected with ethical business loans, but is standing in traditional banking.

After you have gotten an approval, push lenders to take only the collateral they need.   They may refuse, but you should ask anyway.   Calculate the dollar amount of the principal + interest.   Figure out how much in assets they need to cover the loan and how much more they are requiring.   Check if assets are jointly owned if you have less than 100% ownership percentage in the business.

If their request far exceeds what they need to protect themselves, then present them with your calculations and valuations.    This will be your proof, best case, and put the most pressure on them to lower their requirements.

4. Negotiate a release of lien during pay down.

You pay down the balance during the term of the loan, beginning with the first payment.     The loan balance usually goes down much faster than the value of the assets.   Sometimes, asset values go up instead of down.

If the lender has multiple pieces of Real Estate, then negotiate before the loan closes.  Try to get them to agree in writing to release pieces after the balance has been paid down enough to still cover their loan.    A condition may be timely payments of your loan and no other violations of the loan requirements on your part.

Another option is to getting a lender to subordinate their debt to a new lender. If your business is approved, the new lender may not want to take a lien position behind some existing lenders.    If you want to close the loan, you can approach the existing lenders and ask them to let the new lender prioritize their lien position higher than the existing lender.    The existing lender will need to complete a subordination agreement.

Equipment transactions can be handled the same way.   Agree ahead of time with the lender that they will release equipment pieces as you continue to pay the loan down.   It is not likely the lender will do this if you have not negotiated this ahead of time.   If the lender refuses, push them on this point.

Since the balance will go down faster than the value of the collateral,  show them that their collateral position should not get better than when the loan was first closed.

FAQ:  Keeping a Lender from taking too much Collateral:

What is too much collateral?

When lenders approve a loan and take more collateral than they need to safely cover the loan balance if you default on their loan.  Banks routinely take far more collateral than they need to secure a loan.

Can the lender take as much collateral as they want?

Lenders take as much collateral as they want and as you are willing to give them.   Do not offer all of your assets in advance and without negotiating to offer less.

How can I keep the lender from taking all my assets for the loan?

Find out program collateral requirements from the lender ahead of time.  Negotiate collateral terms right after an approval.  This is when you have the most leverage to get any changes you want.


Many lenders often ask for all the collateral you have available.

Most people and businesses believe they do not have any say, influence or choice in this decision.   They do.   The borrower may not get the lender to lower their collateral requirements much, but they sometimes have success.  It depends on the lender, the transaction, and how you negotiate.

Ask for reasonable concessions and justify your request.   This may include calculations, valuations and other proof.    You will get some of what you want more often than you think.

Declined For Not Enough Collateral? Take these Steps

Has your business been declined for not having enough collateral?

Then choose from a small business loan that has 5 very flexible no collateral options.      Click on the Docusign application below because fast as same day or next day funding is just a click away.

You may still able to negotiate.   Lenders often want too much collateral and borrowers do not push back.

Apply Securely Now

DocuSign Secure 15 Second Info Form Here.

Call 919-771-4177 for more info.

Business funding does not have to be hard to get.   Does your business have collateral or cash flow?   If so, there is a program that will fund your business. Requests for higher amounts are much more likely to be declined for the applicant not having enough collateral.     Denied for not enough collateral?  See Tips, FAQ questions and answers below.

The most flexible business loan collateral options of all programs. If it can be used as collateral for a business loan, it will be!


Frequently asked questions FAQ declined for a business loan for insufficient collateral.

What does insufficient collateral mean?

You or your business did not have the assets that lender wanted to approve a loan. We specialize in funding business loans against collateral large and small using many asset types and with the toughest credit a borrower can have.

What can be used as collateral for a secured loan?

We can use equipment, vehicles, semi-trucks, trailers, and real estate for hassle free and quick funding.

What if I don’t have collateral?

A cash flow or unsecured loan can be approved. Pre-qualify immediately and get an approval and funding within hours in many cases.

Why do some loan companies want collateral?

To approve a business loan instead of declining it.   The lender can sell the collateral if a borrower defaults and recover what is owed to them. This lets them make more and higher offers.

Proof of Insurance on Collateral

What is Proof of Insurance?

Proof of insurance for collateral is required for many types of transactions and contracts, including business loans.  Apply Below for business loans that do not require insurance or have flexible insurance features.

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 Call 919-771-4177 for more info.


A business owner is approved for a business loan.   One of the requirements for closing is to show Full Coverage insurance.   For businesses without insurance on collateral, consider other types of business loans that do not require it.
Apply below for options.
Complete the secure DocuSign 30 Second Application now.

Customers cannot always show evidence of Insurance.
What can you do if you cannot show Proof of Insurance for a business loan?
Get low cost insurance to show the coverage you need.   This is
probably the best option if you need to get business funds soon and are already
approved for a loan.

Does your Transaction require Proof of Insurance

Get funding through a different type of loan which
may not need to show Full Coverage Insurance, including a Bank Statement Loan, an Accounts Receivables loan, and also a loan based on Stocks.

Why is Insurance needed and can it be waived?
If Insurance is needed to complete a Transaction, it will not likely be waived because the Lender needs collateral coverage.
Insurance covers the replacement cost of the Asset and the Lender may be approving the loan based on the asset.  The Lenders needs insurance because if the Collateral is damaged, a total loss or stolen, the Lender cannot recoup their losses.   If the Lender does not have this coverage, they probably would not have approved that type of financing.

So if you cannot get and afford full coverage insurance, you can also look at other business loan options.

The following are frequent requests and statements:
– I do not have insurance and full coverage insurance on my Collateral.
– Cannot show proof of insurance on my Collateral, Asset or Equipment.
– I need a business loan without  Proof of Insurance.

Learn more about insurance requirements: