Secured business Loans

Secured Business Loans
The smart way to expand

If you are looking to access funding to take your business to the next level, a secured business loan could be the ideal solution. By offering the assets such as property, machinery, or equipment as security against a loan, you can unlock larger borrowing potential. Read on to learn more about the benefits offered by secured business loans.

How a Secured business loan
will help you

When your business is at the stage where extra funds are needed to help it grow, a secured business loan allows you to tap into larger loan amounts. With a secured loan you can typically borrow between £5,000 – £2 million. There is also scope to go above this amount. In order to access these funds, lenders will be looking for an asset that is worth an equal amount. So, if you were looking to borrow £100,000, the lender would need to see an asset worth at least that much.

Similar to how a mortgage works, lenders will want to carry out a valuation of your assets and ensure that they meet the loan amount. Providing that they do, legal charges are placed against them. This means that if you default on your secured business loan, you are likely to lose your assets. Why would someone pursue this rather than an unsecured business loan? Secured business loans have several advantages:

The risk to the lender is less so you can borrow more

You can pay over a longer-term

The interest rates are more favourable than an unsecured business loan.

You can still access a secured loan with a less than perfect credit history

It is possible to borrow 100% value of the asset that you put forward. The reason for such favourable terms from lenders is that, in the event of a default, they know that they are covered. By staking your assets you are proving your commitment to maintaining your payments and so you are rewarded with terms that work better for you. You must remember that your assets are at risk if you default on your secured business loan agreement.

What assets can be considered as security?

Lenders will consider a whole host of assets as security for a loan. There are even specialist lenders who will consider intangible assets for this. However, the most common assets used include:

Land
Property
Machinery
Equipment
Vehicles

Is my business eligible for a secured business loan?

Eligibility for a secured business loan is, in some respects, easier to meet than for an unsecured loan. Alternative lenders, away from high street banks, won’t usually require an in-depth business plan. Instead, they will require:

You own valuable assets
You are based in the UK
Your business is registered in the UK
Your business has been trading for at least 3 months

How does my credit rating affect a secured business loan?

Creditworthiness will always have an impact when it comes to securing a business loan. However, when it comes to secured business loans, lenders are able to be more flexible. They will minimise their exposure by having security in the form of an asset so are more likely to entertain a poor credit rating.