Secured business loans: what the security is, how it is taken, and what it changes

Every business loan is either secured or unsecured, and the word decides what happens in the worst case rather than the best. This page explains what security is, the forms it takes for a UK limited company or LLP, how a lender takes it, what it changes, and where a personal guarantee fits. CapExpand is a broker. We have access to a range of UK commercial finance lenders through our principal, White Rose Finance Group Limited. The lender makes every credit decision and sets its own terms. Think carefully before borrowing. Property or other assets offered as security may be at risk if you cannot keep up repayments.

What a secured business loan is

A secured loan is a loan the lender can recover from a named asset if the borrower does not pay. The company grants the lender a charge over the asset. While the loan is performing the company keeps using the asset as it always did: it trades from the building, runs the machine, sells the stock. If the company defaults, the charge gives the lender the right to take possession of the asset, sell it and apply the proceeds to the debt, ahead of unsecured creditors.

The charge is a public fact. A charge created by a company must be registered at Companies House under Part 25 of the Companies Act 2006, and the register shows who holds a charge over what. A lender reading your company's file sees the charges already in place before it decides what it can take.

The kinds of security

A legal charge over property

The strongest and most familiar form: a mortgage over a commercial or residential property the company owns, registered at the Land Registry as well as at Companies House. A first charge ranks ahead of everything; a second charge sits behind an existing mortgage and is repaid after it. This is the security behind a commercial mortgage and most bridging loans.

A debenture

A debenture is a document under which the company grants the lender a package of charges over its assets as a whole: a fixed charge over the assets that can be identified and held still, and a floating charge over the assets that change from day to day, such as stock and book debts. A floating charge hovers over the class of assets and crystallises into a fixed charge on a default. Banks and term lenders commonly take a debenture, and only one lender can hold the first floating charge, which is why a second lender asks about existing debentures before it offers anything.

A fixed charge over named assets

A charge over specific plant, vehicles or machinery, identified by serial number or registration. This is the structure behind asset finance and asset refinance, where the equipment itself is the security and the lender's question is what it would fetch if it had to be collected.

Book debts and stock

The sales ledger can be assigned to a lender under an invoice finance agreement, and stock can be charged under an asset-based lending facility. Both are revolving rather than term borrowing and are described on their own pages.

How security is taken

1. The lender identifies the asset and values it. For property that is a valuation by a surveyor the lender instructs; for equipment an inspection or a desk valuation; for a debenture a review of the balance sheet.
2. Existing charges are checked. The lender reads the Companies House register and, for property, the Land Registry title, to see what already ranks ahead of it. Consent from an existing charge holder may be needed.
3. The security documents are drawn. A legal charge, a debenture or a chattel mortgage, prepared by the lender's solicitors, with the company's solicitor advising the company where the lender requires it.
4. The board resolves and signs. The directors pass a resolution approving the borrowing and the security, and sign the documents.
5. The charge is registered. The lender files the charge at Companies House within the 21-day period the Companies Act 2006 allows, and at the Land Registry for property. The loan is drawn once registration is in hand.

The legal work is what makes a secured loan slower to complete than an unsecured one. The valuation, the title review and the registrations each take their own time, and much of it sits with third parties rather than with the lender or the company.

Against an unsecured loan

An unsecured business loan is lent on the company's accounts, its bank statements and the directors' guarantees, with no charge over an asset. It is quicker to arrange because there is nothing to value or register, and the lender's only recourse on default is a claim against the company and the guarantors. A secured loan gives the lender an asset to look to, which is why lenders will consider larger sums and longer terms against security and why they price the two differently. Each lender publishes its own terms for each, and which structure a business uses is its own decision, made on the figures each lender provides for its case.

Personal guarantees

A personal guarantee is a director's own promise to pay the company's debt if the company cannot. It is not a charge over an asset and it is not registered at Companies House; it is a contract between the director and the lender, and on a default the lender pursues the director as an individual. Lenders ask for guarantees on unsecured loans as a matter of course and on secured loans as well. A guarantee that is itself supported by a charge over the director's own home is a separate, more serious step with its own legal advice requirement. The personal guarantee page explains the document and what to read before signing it.

How the cost is expressed

A secured loan is priced as an interest rate, fixed or variable over a reference rate such as Bank Rate, which the Bank of England has held at 3.75% since 18 December 2025, plus an arrangement fee, the lender's legal and valuation costs, and any early repayment charge. Each lender publishes its own, they change, and the valuation and legal costs are payable whether or not the loan completes. We show the costs provided by the lender so you can compare them; no rate on this page is a quote.

Who uses it

Companies that own their premises and want to borrow against them for expansion, an acquisition or a refinance; companies with plant and vehicles on the balance sheet that can be refinanced; and companies borrowing sums or terms that an unsecured lender will not write. The refinancing and acquisition finance pages describe two of the commonest uses.

What a lender asks for

The last filed accounts and recent management figures, the last 3 months of bank statements or an Open Banking connection, details of the asset offered (the title number for property, the make, model and serial number for equipment), the existing charges and who holds them, and a sentence on what the money is for. On property the lender will instruct its own valuation.

Enquiring does not affect your credit score. If you apply to a lender, it runs its own credit search, which may be recorded on your file. We arrange finance only once a business has traded for 3 months, for amounts from £10,000. We work with UK limited companies and LLPs only, for business and commercial purposes.

Sources

The law on company charges is in Part 25 of the Companies Act 2006; the descriptions of each product follow the British Business Bank's published guidance. No lender's figures appear on this page.

1. Companies Act 2006, Part 25: company charges
2. British Business Bank, what is asset finance (security over equipment)
3. Bank of England, Bank Rate (3.75% since 18 December 2025)
4. FCA, consumer credit and the regulated perimeter
5. Companies House, CapExpand Ltd 14433858