Secured Business Loans
Funding That Fits Your Needs!
Secured business loans are a popular funding solution for UK business owners who need capital to grow. By leveraging assets such as property, machinery, or equipment, businesses can access larger loan amounts with competitive interest rates. In this guide, we’ll explore what secured business loans are, their benefits, and how to apply.
A secured business loan allows companies to borrow money using a valuable asset as collateral. Lenders consider this type of loan lower risk, meaning businesses can access higher funding amounts and better repayment terms compared to unsecured loans.
Key Benefits of Secured Business Loans
- Higher Borrowing Limits – Businesses can access larger loan amounts compared to unsecured financing.
- Lower Interest Rates – Since the loan is secured against an asset, interest rates are typically lower.
- Flexible Repayment Terms – Lenders may offer extended repayment periods, reducing monthly repayment pressures.
- Access to Capital for Growth – Ideal for businesses looking to invest in expansion, new equipment, or working capital.
Common Assets Used as Security
Lenders accept various types of business assets as collateral, including:
- Commercial or residential property
- Vehicles
- Equipment and machinery
- Inventory
- Accounts receivable (in some cases)
Is a Secured Business Loan Right for You?
A secured loan is suitable for SMEs needing significant funding with manageable repayment terms. It’s particularly beneficial if you own assets that can be used as security. However, businesses should consider the risks, as failure to repay could result in asset repossession.
Important Reminder: Think carefully before securing debts against your commercial property. Failure to meet repayment terms could result in the repossession of your property.
Advantages and disadvantages of secured business loans
Find the Right Financial Support
Understanding the pros and cons of a secured business loan is important before diving head first into a loan application. Here are the most common advantages and disadvantages to consider.
Advantages:
- Larger loan amounts. With a secured business loan, you can access between £10,000 to £2m+. This is because you’re securing the loan with a high-value asset, meaning you pose less risk to lenders.
- Longer repayment terms. Some lenders will give you up to 10 years to repay your loan, helping you budget your repayments over a longer period of time.
- Lower interest rates. Because you are deemed a safer investment, lenders can offer you competitive interest rates.
- All credit ratings accepted. As you’re securing the loan with collateral, lenders aren’t as concerned with your creditworthiness, which means applicants with good or bad credit can apply for a secured business loan.
- No trading history? No problem. Lenders accept applications from brand-new businesses and startups. This means even if your business is in its infancy, you can still get your hands on the working capital you need to grow.
Disadvantages:
- Higher risk. Although you can unlock better interest rates and longer repayment periods, putting up collateral is a risky move. If you fail to make timely repayments, the lender can seize your asset.
- Personally liable for business debts. If your lender requires you to sign a personal guarantee, that means you’re personally accountable for making repayments if your business fails to repay.
- Higher total costs. Although it’s tempting to repay your loan over a longer period, this ultimately means you’ll pay more interest. So always factor this in before applying.
- Risk of borrowing too much money. If a lender can offer you more money than you need, you might feel the need to take it. Don’t get carried away; stay within your financial limits and ensure you can repay the loan, plus interest, comfortably.
Our funding providers could approve your application for a secured business loan within 48 hours! Compare business loans online now to see the funding options you're eligible for — it's fast and free!
