A secured business loan will entrail a slightly longer application process than for an unsecured business loan but can be a much cheaper way of accessing funds for your business. So, if you want a business loan and don’t mind using your business assets as security, a secured business loan might be the right choice for your business.

What is a secured business loan?

A secured business loan is a loan that requires the borrower to provide assets as ‘security’, this is usually in the form of property, land or equipment owned by the company or its directors. Normally, the loan is ‘secured’ against one or more of these assets, which the lender can take is the business fails to repay the loan.

By offering up collateral as security, it reduces the risk to the lender, meaning secured business loans are generally a much cheaper option than unsecured business loans. This lower risk often means that lenders won’t require a personal guarantee or need to delve too deep into your credit history.

Secured business loan – key considerations

Secured loans can be used for a range of purposes that require significant amounts of capital – from funding the purchase of commercial property to covering the cost of a new piece of machinery.

You will need to either have assets within the business or property with sufficient equity to be able to apply for a secured loan.

  • It’s the cheaper option, due to the lowered risk to the lender
  • Depending on how asset rich the business is, you can potentially borrow more
  • The asset is the main focus, so there is less emphasis on trading history and credit scores, which makes this an ideal option for new businesses
  • Approval will take anywhere from 1 – 3 weeks depending on the lender

Types of security accepted

The types of security required vary from lender to lender but the most common forms of security are debentures and legal charges. The ‘security’ could be in the form of a variety of things, but you can expect to pledge assets such as the following:

  • Property
  • Land
  • Vehicles
  • Equipment
  • Fittings and fixtures

Some lenders request the net worth of all assets instead of valuing individual assets. However, the value of your assets must be sufficient for a lender to justify giving you the loan. Generally, the scope of equipment accepted does mean that a secured business loan works well for all a wide range of businesses across many sectors.

How do I get a secured loan for my business?

At Fundaco we’re experts at taking the hassle out of a funding application. After just one phone call with one of our team, your dedicated finance manager will use their expertise and experience to source the most suitable funding solution for your business and circumstances, often in as little as 48 hours.  

The benefits of a secured business loan arranged through Fundaco:

  • Receive offers in 24 – 48 hours
  • Borrow between £25,000 – £5 million
  • Terms up to 25 years
  • Rates from 1.8% per annum

Simply give us a call to discuss or submit your funding requirements here and one of our friendly experts will get back to your shortly.

Not sure what type of finance you need?