Secured Business Loans

A secured business loan allows you to borrow money by pledging a corporate asset, such as real estate, machinery, or equipment, as collateral.

If you’re a UK business owner in need of finance, pledging an asset as collateral for a business loan could be a terrific method to get the money you need. In our SME guide, you’ll learn everything you need to know about secured company loans.

Secured loans

What is a secured business loan?

A secured business loan allows businesses to borrow money by pledging an asset as collateral. Asset-backed lending is another name for this type of lending.
You could obtain a secured company loan from £5,000 to £2 million+ by using a commercial or personal asset as security against your loan, such as property, equipment, or land.
Because this security is primarily utilised to reduce risk for lenders, interest rates and payback terms are typically quite competitive. However, if your company is unable to repay the loan, the asset may be sold to recoup the funds.

How does it work?

How does it work?

A secured company loan is usually backed by a high-value asset like a commercial property or a home. Equipment, machinery, automobiles, and other goods can also be used as personal or commercial collateral. The procedure is similar to that of applying for a mortgage, and the likelihood is a valuation will be required.
Because the majority of secured business loans have fixed rates, monthly payments are made until the loan is paid off in full. If you default on the loan and do not repay it, the lender may seize your property.

The benefits of a secured business loan

To A secured business loan is often less expensive to repay than an unsecured business loan because the repayments and interest rates are typically lower. Lenders provide more flexibility in their financing arrangements and can offer payback durations of up to thirty years.qualify for a business cash advance, your organisation must meet the following requirements:

Our finance partners could approve your secured business loan application in as little as 48 hours.

Do you qualify?

To be eligible, you must own and operate a UK-registered company that has been in operation for at least three months.
If you have a bad credit history, you may be expected to show a period of consistent progress.

Our alternative finance providers, unlike many high street banks, will not demand full business plans
to process your secured business loan application.

Business savings accounts

How much can you borrow with a secured business loan?

The value of the object you pledge will determine the amount you can borrow. It must be sufficient to cover the loan amount you intend to take out. The majority of lenders will lend up to 100% of the asset value. For example, if you want to borrow £100,000, your asset must be worth as much or more.

What can be used to secure the loan?

Most lenders will consider a wide range of tangible and intangible business assets as collateral for the loan.
The following are some of the most prevalent assets:

Some lenders will accept a multi-asset net worth. Personal assets, such as a car, a home, and stock, can be used as collateral for a secured company loan under certain circumstances. Another form of security that may be required is a personal guarantee.

Tangible refers to something that can be touched, whereas intangible refers to something that cannot be touched. Intangible assets will be considered as collateral by specialist lenders. It is, however, more difficult to value than typical “bricks and mortar” properties or other tangible assets.

Why should you consider a secured business loan?

There are numerous benefits to using a secured company loan over unsecured financing, including lower interest rates. It does, however, come with its own set of hazards, as do any financial products.

Secured business loan lenders often give larger loan amounts than other types of business loans. The value of the collateral used as security against your loan usually determines the amount of money you can borrow. In rare situations, you may be able to borrow up to 100% of the asset’s worth.

Because repayment periods are often long, managing the debt is easier. As a result, business owners may focus on building their companies while budgeting successfully over a lengthy period of time.

Secured business loans often have a lower APR than unsecured business loans since the lender’s risk is reduced by using a business or personal asset as collateral.

Although credit history and credit ratings are still important, firms with a low credit history might still qualify for this sort of financing because the asset will be utilised as collateral.

For a startup with no trading experience – It’s ideal for new enterprises that haven’t yet submitted yearly accounts or those who haven’t established a credit history. After that, you can borrow against your company’s assets.

Whatever asset you choose to secure against will be at danger, and you may lose it if you do not adhere to the lender’s repayment terms. To cover the cost of the existing loan, the lender will take possession of the asset.

Can you get a secured business loan with a mortgage?

Can you get a secured business loan with a mortgage?

You certainly can. It’s worth mentioning that if you’re selling commercial property or land with an existing mortgage, the lender may file a legal or equitable charge against the asset.

What's a legal charge?

What's a legal charge?

If repayments are not made, a legal charge gives the lender the right to sell the property.
However, filing a legal charge can take time, and cash may not be available for several weeks if authorization from an existing lender is necessary, such as a mortgage provider.

What is an equitable charge?

What is an equitable charge?

Many secured business loan lenders choose to register an equitable charge on a property, which is a quick process that does not require the mortgage provider’s consent.
Although the lender will not have power of sale over the property, it will provide sufficient security for them to approve your loan. Funds are made available within hours of approval with an equitable charge.
Enquire now to see how we can assist your business.

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Frequently Asked Questions

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A Secured Business Loan is a type of loan that requires you to offer some form of collateral, for instance, property, equipment, or another asset, as security against the borrowed amount. This collateral can be seized by the lender if you fail to repay the loan.

With a Secured Business Loan, you pledge an asset as collateral. The lender then grants a loan based on the value of this asset. If you fail to repay the loan, the lender can legally sell the collateral to recuperate the overdue payment.

Secured Business Loans typically offer higher loan amounts, lower interest rates, and longer repayment terms compared to unsecured loans. This is because the lender has less risk due to the secured collateral.

Requirements may vary, but generally, you need to own a valuable, legally-binding asset that you can use as collateral. The lender might also assess your business performance, credit history, and ability to repay the loan.

This can vary depending on the lender. Common forms of collateral might include property, equipment, vehicles, inventory, or outstanding business invoices.

Approval times can range from a few days to a couple of weeks. It depends on the value of the collateral, complexity of the loan, and the lender’s due diligence processes.

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Interest rates tend to be lower on Secured Business Loans because the lender has collateral as security. The actual rate will depend on factors such as your credit score, business health, and the loan term.

Yes, besides interest, there might be setup fees, valuation fees for the collateral, legal fees, and potentially early repayment fees.

Repayment structure depends on your agreement with the lender. Usually, you’ll be expected to make regular repayments (monthly, fortnightly or weekly) over a set period, covering both interest and part of the principal.

Most lenders allow early repayments, but some may charge a penalty or an early repayment fee. Be sure to verify this with your lender.

If you default on the loan, the lender has the right to seize the asset used as collateral to recover the loan amount.

This depends on your circumstances. Secured Business Loans can offer more favourable terms than unsecured loans. However, you must be willing to risk losing your collateral if you’re unable to make repayments, and you should always seek independent financial advice before making such a decision.

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