Is there a regulation that says you can't secure a loan with funds from a checking account?

Not a federal law. Maybe state?

Thats what I thought. Thank You.

Please don't secure a loan with a checking account. Your hold will be defeated the first time a "must honor" debit transaction comes through. Savings, CDs - yes. DDAs - Not wise.

You may take a security interest in a DDA. If it secures a business transaction its OK to perfect the lien; if it secures a consumer transaction, in most states perfection may be a problem. Putting a hold on the account is not required to perfect the security interest; however, without the hold there may be no funds available to pay the debt.

If they process ATM or other electronic transfers or payments a hold may be a problem. Your decision.