2025 Secured Small Business Loans: Using an Asset to Get Funds

2025 Secured Small Business Loans: Using an Asset to Get Funds

About 2025 secured small business loans – including what they involve; when they do and don’t make business sense; and details of the loans that Lamna offers.

At Lamna, we offer secured small business loans to South African business owners and small to medium companies.

In this article, we outline:

Options for getting a small business loan

A number of options exist for securing small business funding in South Africa. That said, the process isn’t necessarily an easy one – and there’s no guarantee that a loan application will be approved.

The government offers various types of funding for small businesses and start-ups, from grants and incentives to equity funding. For example, funding may be available through agencies such as the:

Applying for these funds and grants is complex. It can take months – and funding is not guaranteed.

Banks and other financial institutions offer unsecured short-term loans to businesses. These are subject to approval processes.

For small businesses and startups, it can be especially difficult to qualify. This is because often, financial records spanning multiple years are required. It also takes time to build up a good credit score.

As an alternative, lenders like Lamna offer secured loans, which are backed by collateral (one or more assets of value).

What is a secured short-term business loan?

secured loan is a loan that uses a valuable asset, like a vehicle or jewellery, as collateral. The loan amount is based on the market resale value of an asset and not on your monthly income or credit score.

An unsecured loan is a loan, such as a personal loan from a bank, that isn’t backed by the value of collateral you supply. Instead, the lender makes an informed guess – based on information about you and your business – about the likelihood that you’ll repay the loan plus interest.

Because secured loans are backed by collateral, they’re typically faster and easier to get than unsecured loans.

Approval is also less likely to depend on your current employment status or credit score.

If you’re unable to repay a secured loan, the asset you used as collateral may be sold to recoup the loss.

A short-term business loan must typically be paid off within a period between three and 18 months. This differs from a loan such as a home bond, which may be paid off over a period of decades.

Also, short-term loans usually involve smaller loan amounts than longer loans.

General criteria for deciding to get a secured business loan

For a small business, any kind of short-term business loan (secured or not) makes sense only when two main criteria apply:

  • the business is facing a short-term shortage of funds, needed to continue operating and/or to leverage an opportunity that might otherwise be lost
  • an in-flow of cash is expected in coming weeks or months.

In other words, funds are needed now – but you know the business will be able to repay a loan within a reasonably short term.

Examples: when it does (and doesn’t) make sense to get a secured business loan

To illustrate, we offer some examples of when it generally does – and doesn’t – make financial sense to borrow money for a small business.

When a secured loan makes sense

A small to medium business might have temporary need funds for a range of reasons.

Examples of situations where funds are needed only for a short term (a future in-flow of cash or stabilisation of normal revenue is expected):

  • paying suppliers before a purchase order or tender is completed and the client makes final payment
  • covering operating costs while waiting for late invoices to be settled
  • using working capital to expand a business in ways predicted to boost revenue
  • building up inventory and hiring temporary staff to cope with a seasonal increase in demand
  • covering unexpected emergencies, like a natural disaster, equipment failure or an IT glitch (normal cash in-flow is expected to resume after a recovery period)
  • investing in a revenue-generating business opportunity.

Consider three case examples.

Case 1

A small web development business is generally doing well but depends on income from a small number of high-paying clients. Now, a significant payment from the company’s largest client has run late.

To make end-of-month salary payments, the business owner gets a loan against personal assets – including an artwork by a famous artist.

Once the late payment comes in (along with payments from other clients), the company’s cash flow stabilises and it can repay the loan. The artwork is then returned to the business owner.

Case 2

A small business has the skills and innovation – but not the working capital – to do the work involved in a lucrative government tender.

The business owner uses a loan against a personal luxury vehicle to raise working capital. This enables the business to grow rapidly and to win further tenders in the future.

The owner pays back the loan only after receiving payment for the work.

Case 3

The owner of an e-learning firm sees an opportunity to acquire a competitor’s business and needs to act fast. She leverages a personal asset – a luxury vehicle – to get funds to exploit this lucrative opportunity.

When a business loan probably doesn’t make sense

Generally, it doesn’t make sense to use a short-term business loan to pay off other debt.

An exception sometimes exists if the new loan is at a significantly lower interest rate. In this case, the new debt might be used to “consolidate” multiple other debts.

Also, don’t consider an unsecured short-term business loan if it’s unlikely your business will be in a position to repay the debt.

For example, a loan isn’t the solution if a business simply isn’t profitable.

It’s also not the best idea if the immediate future of a business is at risk – for example, because of loss of suppliers, clients or both.

Note that banks may ask for a personal guarantee before approving a business loan. This means you must personally repay the loan if your business defaults.

Secured small business loans from Lamna

At Lamna, we offer fast, discreet loans against the value of a wide range of assets, from luxury watches and jewellery to vehicles or artwork. We’re a registered credit provider and have well-established branches in several major South African cities, as well as in Botswana.

Advantages of a secured loan from Lamna:

  • finalised within 24 hours
  • quick and discreet application process
  • no credit check
  • doesn’t affect your credit score
  • no need to be employed
  • competitive rates and NCR compliant.

For more information about using a 2025 secured small business loan, contact us on 086 111 2866 or simply complete and submit our online application form.

ILLUSTRATIVE EXAMPLE

Client borrows R10,000 for 90 days.

Loan Amount
Repayment Period
Monthly Interest
Total Cost of Loan
Initiation Fee
Monthly Fee
APR
R10 000
3 months
R500.00
R2 914.50
R1 207.50
R569.00
60%

Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.

APR & Loan Repayment Period

Fixed rates range from 36% to 60% APR and payment options range from minimum 3 to maximum 24 months. Apart from the initiation and monthly fees shown below, the only additional fee is credit life insurance if the borrower does not have this already.

Non-Payment

Non-payments may result in the matters being escalated.

Renewals

All accounts may be renewed if they are up to date.

Collection

All payments are made via EFT or direct deposits into Lamna’s bank account. There are no debit orders.

2025 Secured Small Business Loans: Using an Asset to Get Funds

Apply Online

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2025 Secured Small Business Loans: Using an Asset to Get Funds

Apply Online

This field is hidden when viewing the form

2025 Secured Small Business Loans: Using an Asset to Get Funds

Apply Online

2025 Secured Small Business Loans: Using an Asset to Get Funds

Apply Online