re: Secured LOCs: What is the point?

A lot of times it is better to borrow money in a company with multiple owners, even if one owner is the person pledging the collateral. Subordinated debt can get messy. Your basically paying a little interest to have a banker make sure the transaction is handled properly.

Also, it's a good way to build a relationship with a bank. Start with cash secured debt and then once they get comfortable with you, they will release the collateral.