SECURED BUSINESS LOAN

Secured Business Loan

A Secured Business Loan allows businesses to raise funds using an asset to secure the funding. The 'security' is usually a valuable asset that is either owned by the business or its directors/shareholders. Typically, the assets are tangible assets such as vehicles, machinery and commercial or residential property. A secured loan will generally allow a business to borrow more, at a cheaper rate and over a longer term than an unsecured business loan.

How does it work?

 

A Secured Business Loan is normally secured against a high-value asset, such as a property. The lender will require a valuation against the property and solicitors will act to register the charge over the property. In addition, any lender with a prior charge over the asset will need to consent to the lender registering the charge. Finally, the borrower and owners of the property will need legal advice to ensure they fully understand the risk associated with security and any guarantees they are giving. 

Advantages of a Secured Business Loan

  • You can borrow more than most other types of funding 

  • As it is secured, the rate you pay is lower than other types of funding 

  • The term of the loan can be spread over a longer term 

  • Available for a new start or an established business

  • Adverse credit histories can be considered

Disadvantages of a Secured Business Loan

  • Should you not be able to meet repayments, the asset given as security may be repossessed 

  • There are some upfront costs to pay for such as valuation solicitor and arrangement fees. Although some of these can be added to the loan.

All businesses, credit histories and assets considered. Find out if we can help.