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Written by Jake Dye
Jake Dye heads our Business Loans division with over 5 years of commercial finance experience, focusing on unsecured lending solutions for small and medium-sized enterprises. Jake has built strong lender relationships across the SME sector and has a track record of placing funding for businesses ranging from early-stage companies seeking their first facility to established operators looking to fuel growth and expansion.
Secured loans for UK businesses
A secured business loan enables you to access funding which is secured against one or more of your business assets. This reduces the risks for the lenders and increases your chances of being approved. And with the right help, you’ll be able to access lower interest rates, longer terms and larger loan amounts than with an unsecured loan.
At UK Business Finance, we can help you find secured loans that are the right fit for your business. Just tell us what you need and we’ll search the whole market to bring you the best quotes. There are no fees for our service, so you can benefit from our market insight without any additional charge.
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With full market access and absolutely no ties to any lender, we can objectively match you with the most effective and cost-efficient source of business finance. Contact our team today!
What is a secured business loan?
A secured business loan is a loan that uses one or more of your assets as security against the money you borrow. If your business cannot repay the loan, the lender can claim ownership of the asset and sell it to recover the loan amount. This reduces the risk for the lenders, which usually allows you to borrow more and at lower rates than with an unsecured loan. The lower risks also increase your likelihood of being approved.
You can use all sorts of business assets as security, including physical assets such as property, equipment and machinery and even intangible assets like trademarks and intellectual property. Lenders may also accept your personal assets as security.
How much can I borrow with a secured business loan?
Because a secured business loan is backed by a tangible asset, lenders are often willing to extend considerably larger sums than they would through an unsecured facility. The amount your business can borrow will largely be determined by the value of the asset offered as security, alongside your trading history and overall financial position.
As a general guide, secured loans typically start from around £25,000, with facilities extending much higher where a high-value asset, such as commercial property, is offered as security. Because the lender has a tangible asset to fall back on, decisions can sometimes be reached with fewer restrictions on turnover or trading history than would apply to an unsecured facility.
Repayment terms tend to reflect the size and nature of the asset securing the loan, often extending over a longer period than an unsecured loan, which can help keep monthly repayments manageable.
If you're unsure how much your business could borrow against a particular asset, our team can talk you through the options before you commit to a formal application.
How does a secured business loan work?
A secured business loan works by using a business asset, such as commercial property, land, or other qualifying assets, as security for the amount borrowed. In return for accepting this asset as collateral, lenders are often able to offer higher loan amounts than an unsecured alternative.
Once agreed, a legal charge is placed over the asset, giving the lender a right to recover it should the loan not be repaid as agreed. This reduces the lender's exposure, which is why secured facilities can often accommodate larger sums or businesses with a less established trading history.
From there, the process runs much like any other business loan: you receive the agreed capital and repay it, with interest, over the agreed term. Our team manages the process on your behalf.
What are the benefits of secured business loans?
If you want capital to grow your business and you have assets to use as collateral, a secured business loan can be an effective way to raise the funding you need.
Here are some of the benefits:
- You can borrow larger loan amounts
- The repayments terms are usually longer, typically up to 10 years
- Lower interest rates over a longer term can lead to more affordable repayments
- Your application can still be accepted if you have bad credit
- You don’t need a solid trading history to be accepted
There are also a few things to think about. Secured loans can take several weeks to arrange as the lender will need to value your assets, so they’re not as quick as unsecured loans. You may also have to pay money upfront to cover valuation fees, and legal fees may apply if the lender places a legal charge on your property. A key business asset could also be at risk if you fail to keep up with the repayments.
Will I need to provide security beyond the asset itself?
In most cases, the asset offered forms the primary security for the loan, though the specific requirements can vary depending on the size of the facility and the lender involved.
Commercial and residential property: Commercial premises, land, and in some cases residential property can be used as security, provided there is sufficient equity available. Where a mortgage or existing charge is already in place, lenders will usually look at the equity remaining after that borrowing is taken into account.
Personal guarantees: Even where an asset is being used as security, some lenders may still ask directors or business owners to provide a personal guarantee, particularly where the loan amount is close to the value of the asset offered. This provides an additional layer of assurance for the lender, though it is not required in every case.
Sole traders and partnerships: Where a business operates as a sole trader or traditional partnership, personal liability for business debt already exists by default, so an additional personal guarantee is less commonly required as a separate step.
Am I eligible for a secured business loan?
If your business owns high-value assets or you’re willing to put up personal assets as security, you’re likely to be eligible for a secured business loan.
The eligibility criteria differs from lender to lender but they will usually expect to see:
- Minimum 6 months business trading history
- Your credit report
- Financial forecasts that show your business is viable and able to make the repayments
The amount you can borrow will depend on the value of the asset(s) you put up as security. The lender will value your assets and let you borrow up to 100% of that amount.
What can I use a secured business loan for?
A secured business loan offers considerable flexibility, and funds can typically be used for a wide range of business purposes, including:
- Funding business expansion or the purchase of new premises
- Acquiring a competitor or another business
- Refinancing existing debt onto more favourable terms
- Injecting working capital into the business
- Investing in large-scale equipment or machinery
- Supporting a major refurbishment or development project
- Settling a tax liability, such as a VAT or corporation tax bill
- Releasing capital tied up in property or land you already own
Why use a finance broker for a secured business loan?
Securing a loan against a business or personal asset isn't something to approach without the right guidance. Therefore, going direct to a single lender means being limited to their criteria and appetite for the type of asset being offered.
Working with a broker such as UK Business Finance opens the door to a wide panel of lenders, each with differing views on asset types, loan-to-value ratios, and sectors. We know which lenders are best placed to consider your application, helping to avoid unnecessary delays or a declined application.
We also support you through the valuation process, liaise with lenders on your behalf, and keep the application moving from initial enquiry through to funds reaching your account.
Find the right secured loan for your business
Use UK Business Finance to find the funding you need. Once you’ve told us your funding objectives and requirements, we’ll search more than 50 UK lenders to bring you the best quotes. There’s nothing to pay for our service and we even complete loan applications on your behalf.
Request a quote online or get in touch via phone or email to discuss your funding requirements with our team.
Secure your free quote today!
Our team of finance experts can provide industry-leading advice on finance options to suit a range of different scenarios. Call the team on 0808 301 0624 or Contact Us
How do we work?
1. Get a Customised Quote
When you reach out to us, we will likely request that you provide the following information. Your latest set of accounts, previous 6 months’ banks statements and director’s personal details.
2. Compare Options
Once the information from step 1 has been confirmed, we will reach out to our extensive panel of funders, who under normal circumstances, respond with an answer in 48 hours. After this, Know Your Customer (KYC) and identification checks will take place for the business and its directors.
3. Finalise the agreement
As soon as you agree to move forward with the terms and conditions, you will receive the relevant documents for you to sign and then return. After the final checks have been completed, the funds will be released. The time taken to release the funding varies depending on the funder, ranging from 24 to 72 hours.
Secured Business Loan FAQS
Can I get a secured business loan if I already have a mortgage on the property?
In many cases, yes. Lenders will usually look at the equity you hold in the property once any existing mortgage or charge is taken into account, rather than requiring the property to be unencumbered. The amount you can borrow will depend on how much equity is available and the lender's own criteria for second-charge lending.
Do I need to get the asset independently valued before applying for a secured loan?
Not necessarily before you apply, but a valuation will typically form part of the lender's assessment once your application progresses. In most cases, we can guide you through arranging this as part of the process, and having a recent valuation or a clear idea of the asset's worth beforehand can help speed things along.
How long does it take to arrange a secured business loan?
Timescales can vary depending on the lender, the complexity of the security being offered, and how quickly any valuation or legal work can be completed. Having your business financials and details of the asset ready from the outset will help keep the process moving as smoothly as possible.
Is a secured business loan the same as a commercial mortgage?
Not quite. A commercial mortgage is a specific type of secured lending used to purchase or refinance property, whereas a secured business loan is a broader term that can be secured against property or other qualifying assets and used for a wider range of business purposes. We can help you identify which structure best suits your requirements.
What is the difference between an unsecured and a secured business loan?
With a secured business loan, you offer an asset as collateral. This gives the lender security if the loan cannot be repaid, and in return they will usually offer lower interest rates and access to higher borrowing amounts.
An unsecured business loan, by contrast, does not require any collateral. Approval is based on the financial standing of your business and, in most cases, a personal guarantee from a director. This makes unsecured loans faster to arrange and more accessible for businesses without significant assets.
Which option is right for you will depend on your business circumstances, the amount you need to borrow, and whether you are comfortable using an asset as security.
What assets can be used to secure a business loan?
A wide range of assets can potentially be used, including commercial property, residential property, land, and in some cases other high-value business assets. The suitability of an asset will depend on its value, any existing charges against it, and the lender's own criteria, so it's worth discussing what you have available with our team before applying.
