Most small and weak businesses use secured loans in short term finance. Most businesses like consumers, would rather borrow funds using no security. A secured loan is backed by collateral, for short term loans. The collateral can include a business's inventory, receivables, land , buildings, equipment,marketable stocks and etc.. Sometimes the firms use of collateral can lower the interest rate of the loan. The less risk the lender has the lower the interest rate should be.

Some firms are large and strong enough to issue IOU's. Simply put, IOU's are commercial paper. These type of loans are unsecured type of debt, but very attractive, because the cost associated with this type of debt is generally lower than prime rate. Most commercial paper is sold to other businesses. Note, commercial paper does not pay interest, rather , it is sold at a discount that is , for less than its face value and than redeemed for face value at maturity.