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Secured business loan

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Jan 4, 2023

Fact Checked By:
David Nicholson - Finance Editor

Secured business loans – How we can get you approved in 24 hours for a secured business loan

A wide variety of commercial borrowers can get secured business loans for business finance.

A secured business type of loan can be secured against an asset the borrower owns, for example, property.

Here you will find information on secured business loans from the UK’s top business finance providers and how a secured business loan works.

We can get you approved for a secured business loan in just 24 hours of online application, start now below:

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What are secured business loans?

A secured business loan can be applied for by a company using its assets as collateral. The lender can claim the ownership and sell the assets that were used as security if the company defaults on loan repayments.

This effective guarantee means that it is often possible to borrow more money or get a lower interest rate when business loans are secured against property, as opposed to an unsecured loan where security is not required.

The way secured business loans work, secured business loans may also be called asset-backed loans or asset-backed finance. They may also be known as secured small business loans.

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How does a secured business loan work?

Based on the type of loan chosen, secured business loans can be used in a variety of ways. There are many types of secured business loans:

  • Term loans secured business term loans are usually available for the short, medium and long term. The loan is slowly paid off by making monthly payments.
  • Interest-only loans This type of loan is fixed for a certain time, but your monthly payments will only ever pay the interest. While this keeps the repayments low you will still need to repay the original loan amount at the end or refinance the capital to get a new loan.
  • Bridging loans These secured business loans are intended to bridge short-term financial gaps. A bridging loan can be paid off in one lump sum. This includes both capital and interest.


What are the advantages of a secured business loan?

  • A secured business loan often offers lower interest rates than unsecured loans of the same type.
  • Large secured business loans may be approved if sufficient assets can be used as collateral.
  • It is usually possible to repay the secured business loan over a longer period of time.
  • Even if you have a poor trading record or a bad credit rating, getting secured business finance could still be possible.
  • Start-ups with no trading history may be eligible for a secured business loan.

What are the disadvantages of a secured business loan?

  • You must have the right assets for your business.
  • If repayments are not made, these assets could be lost.
  • It can take longer to arrange due to the presence of assets and the need for appropriate legal arrangements.

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What assets are available for a secured loan to a business?

Lenders will typically accept tangible and hard business assets that you can physically touch or see as security for a secured loan. Specialist lenders might also accept intangible assets or business assets that are not tangible or touch as security for a secured loan.

Lenders might accept a mixture of assets as security. This could include personal assets like your home or car. Although cash may be used as collateral for a secured business loan, the terms of these loans can often be different from those secured by property or other assets.

Secured business loan options

The many UK-secured business loans can be tailored to meet your company’s requirements. This means that you can only borrow what you need (subject to the minimum loan amount a lender may require).

The value of your assets as security will determine the maximum amount you can borrow. You have the option of a short-term loan or a long-term loan.

Lenders will usually allow you to spend the money however you wish. You must repay the secured business loan in accordance with the agreement. Otherwise, your collateral assets could be lost.

Fixed interest rates are a common feature of business loans secured against real property. This gives you certainty about the amount and when repayments will be made.

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Applying for a secured business loan

Different lenders may have different requirements. The way secured business loans work, a business must have been registered to trade in Britain for at least three months and have an asset or assets that can be used as security.

A personal guarantee may be required if your business is established as a limited company, limited liability partnership or limited liability company. As additional security, the lender may ask you to provide personal assets such as your home and valuable personal possessions.

How to apply for a secured loan for your business finance

A consultation with the lender will be required to discuss your eligibility and borrowing requirements when applying for a secured loan for business. Most commonly, questions will be asked about your line of business, trading history, and what your plans are for the funds.

Lenders will examine your credit history. However, even if your credit score is not good, you have a low turnover, or lack of trading history, this doesn’t mean that you won’t be able to get a secured loan for your business. Instead, the lender will likely place greater emphasis on the value and merits of your assets as security.

Lenders will need to assess your assets to determine if they are willing to lend you money and on what terms. If they agree to lend you money, then the legal documents must first be signed.

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What is the difference between an unsecured and a secured loan for a business?

A secured business loan will require assets to secure it, while unsecured business loans don’t. When granting an unsecured loan, lenders will consider the company’s turnover, trading history, and credit rating. Unsecured business loans are not secured by collateral.

The security provided by assets for a secured business loan means that it usually has a lower interest rate than a comparable unsecured loan. This is because there is less risk that the lender will not get its money back.

Asset-backed lenders are more likely to lend higher amounts and offer longer terms due to the security.

The maximum amount you can borrow will depend on your company’s turnover.

Applying for a secured loan for business is more complicated than an unsecured loan because assets are required. There are often upfront fees for secured business loans.

These fees cover the extra expense of valuing the assets and making legal arrangements.

How to get a secured loan for your business with poor credit

A secured business loan provider will typically place more importance on assets than credit history. Therefore, a bad credit application will not automatically be rejected.

A lender might ask for proof that your company is financially stable before they approve a loan to a company with poor credit.

What is the maximum amount I can borrow?

A secured business loan can only be used to borrow the amount equal to the value of your assets. This will depend on the collateral. Lenders are often willing to lend up to the entire collateral value.

What are the fees and charges associated with a secured loan for a business?

A secured business loan may have higher fees than other types due to the extra charges associated with the valuation, legal arrangement and documentation of collateral assets. These fees are usually covered by an arrangement, booking, or origination fee.

There might be a fee charged by some lenders for wire transfers or bank deposits. Broker fees could also apply if a broker is involved in the transaction.

Late payments will usually result in a penalty fee. If you pay your loan early, you may be subject to early repayment fees.

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What rates are available?

The interest rate you pay for business loans secured against property depends on the amount you borrow, the terms it will be repaid over, and the loan’s size relative to the protected asset. The interest rate may be lower if the loan is smaller percentage of your assets.

Getting the lowest rates available for secured business loans may be more difficult. This is especially true for those with poor credit. However, it can also be harder to obtain the lowest rates possible for start-ups and people in business that are considered riskier by lenders.

How long does it take to receive funds?

A secured business loan is more time-consuming than an unsecured loan because it requires asset verification and to meet legal requirements. Although timeframes can vary between lenders, two to three weeks is the minimum that most people aim for.

Are my business assets at risk?

Secured business loans have the potential to cause your assets and other property to be forfeited if you fail to make your loan payments on time. Talk to your lender immediately if you are having trouble paying off a loan.

What are the alternatives for secured business loans?

There are many options for secured business loans if you don’t want to use your business assets as collateral or you don’t have the assets. These include unsecured business loans, credit cards, credit lines, and business overdrafts. This is especially true if you are borrowing small amounts.

Invoice financing is another option. Businesses can borrow money against invoices that have yet to be paid.

Asset financing is an option for businesses that need new machinery, equipment, or vehicles. It can help spread the costs of buying or hiring these assets.

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Secured business loan advice

We make it easy to find the right secured loan for your business. We will discuss all the specific lending criteria and advice which would work best for your company.

Lenders can be classified according to how much they will lend, what terms they offer or what turnover they require. Our featured lenders are the default.

We will explain additional information about a loan, including eligibility criteria.

FAQ: Secured Business Loans

What is the best way to determine if a small business loan is secured or unsecured?

You have two options when it comes to small business loans. There are both secured and unsecured options. The best business loan for you depends on your personal circumstances, business needs and whether you have the assets to support a secured loan.

Is it easier to obtain secured loans than unsecured loans?

It will depend on your business situation. It might be easier to obtain a secured loan for your business if you have poor credit or a low turnover. An unsecured loan is your only option if you don’t have the assets to qualify for a secured business loan.

Can I get a loan for my business without any security?

An unsecured loan for a business can be obtained without the need to provide security. Lenders will instead look at your credit score, trading history, and turnover to determine if you are able to make the repayments.

Is a secured business loan bad for your credit score?

Your business’ credit score will be negatively affected if you fail to make the monthly repayments or default on your secured loan.

Do I require a personal guarantee?

If your business is a limited company, limited liability partnership or limited liability corporation, you may be required to give a personal guarantee. Lenders may request a personal guarantee if you don’t have enough assets to back up the secured business loan amount.

What happens if I don’t have any business assets as security?

Even if your company has no assets, you may still be able to obtain a secured loan for your business using only your personal guarantee. You may also consider an unsecured loan for your business.

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