Generally speaking, with the high failure rates of businesses, Lenders will typically ask you to provide them with a lien, mortgage or charge over some or all of the assets of the business; also known as collateral. This type of loan is called a: Secured Loan.
Secured Loans - Liens, mortgages or charges
In concept, this is similar to a mortgage on your home. You provide the bank with a mortgage on your home, and in the event that you cannot repay the mortgage, the bank can legally foreclose and sell your home.
In a business scenario, you provide the lender with a lien over the business assets, which can typically include the fixed assets or equipment purchased (as in the case of a term loan), or Accounts Receivable {amounts due from Customers}, Inventory, Work in Process, Deposits etc.
Lenders typically require a signed General Security Agreement (GSA) that provides the lender with a charge over all of your business assets.
Unsecured Loans
Unsecured loans are loans which you (or your business) obtain but for which you do not have to pledge any form of collateral.
Some basic examples of these types of loans are credit cards & personal lines of credits. The rates of interest that one pays on unsecured loans is typically higher than on secured loans as Lender or Bank has no collateral to look to in the event of default.
The primary recourse of a Lender in this scenario is to sue you (or your business) for non-payment of the loan. If they are successful, they would get a Judgment from the Courts which could be used to attach certain of your assets. A commonly used form of seizure for a Judgment Creditor is a Garnishment Notice. This Notice can be served on the businesses bank and the bank would be legally obligated to withdraw funds from your bank account (without calling you!) to pay this Garnishment.