A secured business loan is money your company borrows against something it owns. The lender takes a legal charge over a named asset – a building, a machine, your stock – and can sell it if the company can't repay. That recourse is why a secured loan usually costs less and goes further: the lender carries less risk, so it can lend more, for longer, at a lower rate. Which makes the real judgement less about the rate than about which asset you're willing to put behind the debt, and what happens to the business if you lose it.

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What is a secured business loan?

A secured business loan is one where your company pledges an asset it owns as collateral. Because the lender can fall back on that asset, it generally offers lower rates and longer terms than it would without one.

The asset has to belong to the company. A limited company is a separate legal person: it owns its own property and accrues its own debts, so the security it gives is over its own assets, not yours. If a lender wants your house behind the deal, that's a charge you give personally rather than company security, and it deserves its own decision.

So secured lending suits companies that already own something substantial – larger amounts, over longer periods, at lower rates than most unsecured business loans reach. Security doesn't settle whether the company can afford the repayments, though, so a trading record and a decent business credit score still count.

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Secured vs unsecured business loans

The difference is what the lender can take if the company doesn't repay. A secured loan gives it rights over a named company asset. An unsecured loan doesn't, so the lender looks at your trading record, your credit history, and almost always a personal guarantee from a director instead.

That last point is where most explanations of this go wrong. 'Unsecured' describes the loan, not your exposure. The Insolvency Service defines a guarantee as 'a legally binding agreement that the director will personally repay a debt if the company fails to meet its financial obligations in relation to that debt', and its guidance on personal guarantees is blunt about the consequence: personal assets 'such as your home, car, savings and investments could be used to settle that company debt'. A guarantee can also be secured in its own right, backed by a charge over the guarantor's property. So an unsecured loan isn't a loan with nothing behind it. It's a loan with a director's signature behind it instead of the company's warehouse.

Here's what the choice changes in practice. These are tendencies rather than rules, because each lender sets its own terms:

Valuation and legal work cost a lender much the same on a small loan as on a large one, which is why smaller business loans rarely carry security. On a loan that size, expect to be asked for a guarantee rather than for collateral.

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How a secured business loan works

Secured business loans require you to pledge assets as collateral – property, equipment, stock, or even unpaid invoices. Four things happen between the application and the money arriving:

1. You offer the asset. Something of value the company owns, such as commercial property, machinery or company vehicles. The lender decides whether it will accept it.
2. The lender values it, and you. The collateral reduces its risk, so it can approve a larger amount at a lower rate than it would otherwise. It still checks that the company can make the repayments.
3. You take the money. A secured loan puts cash in the company's account rather than paying a supplier directly, so you decide what it buys.
4. You repay over the term. Rates can be fixed or variable. If the company stops repaying, the lender can seize and sell the collateral to recover what it is owed.

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How a lender takes security: fixed charges, floating charges and debentures

The pledge becomes real through a charge. In UK company law, a charge is a security interest a company creates over its assets to secure a debt, and it works a little like a mortgage: if the company doesn't repay, the lender can claim what the charge covers. There are two kinds, and which one you give matters.

A fixed charge sits over a named asset – a freehold, a particular machine. The company carries on using it, but can't sell or refinance it without the lender's agreement. A floating charge sits over a changing pool instead, such as stock or book debts: the company trades as normal, and the charge only settles on whatever is in the pool if something goes wrong.

Both are usually set out in one document, a debenture. An all-asset debenture combines them – fixed charges over the identified assets, a floating charge over everything else – so signing one commits the whole balance sheet, not just the thing you were borrowing against.

Then it goes on the public record. Under section 859A of the Companies Act 2006, the charge has to reach Companies House within 21 days, counted from the day after it was created, with a certified copy of the document that created it. Registering it costs £14 online; the legal work behind it costs considerably more.

Miss the deadline and only a court can let you register late, which is why lenders are strict about it. Under section 859H the charge becomes void against a liquidator, an administrator, and any creditor of the company – worthless in the one situation it was bought for – and the money it secured becomes immediately payable. The debt doesn't disappear. It falls due at once, unsecured.

The record also outlasts the loan, and we see that from our side: when a limited company applies to us, we read its charge register, including whether a charge is fixed or floating, whether it covers everything the company owns, and whether it's still outstanding. Companies House doesn't make a company tell it when a charge has been paid off, but warns that 'any satisfied charges left outstanding on our records could have a negative effect on your company'. An old charge still showing as outstanding is an avoidable reason for a slower answer somewhere else.

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What assets you can use as security

Anything the lender could sell, and value with confidence. Lenders lend against what an asset would fetch in a hurry rather than what it's worth to you, so expect a loan sized to a cautious valuation. The main classes are:

• Commercial property the company owns, such as offices, warehouses, or retail units. Usually a fixed charge, and the largest amounts come from here.
• Equipment and machinery, including heavy plant and other high-value tools. A fixed charge, discounted for age and condition.
• Vehicles, such as company cars, vans, or delivery trucks. Lenders weigh age, condition, and market value, and may ask for proof of insurance and maintenance records.
• Stock, including raw materials and finished goods. Usually a floating charge, because it turns over.
• Unpaid invoices, more often used for invoice financing than as security for a loan.
• Cash savings or deposits the company holds, with some lenders.

Borrowing against several of these at once, with the facility sized by what the whole pool is worth, is asset-based lending rather than a secured loan, and it's built for far larger facilities.

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When to use secured business loans

Security earns its keep when the amount is large, the asset is long-lived, and the term is long enough for the lower rate to be worth the paperwork. In practice, that means:

• Buying or refinancing premises, or funding an expansion beyond what an unsecured lender will offer.
• Replacing big-ticket equipment that will still be working in five years' time.
• Funding a change of system or site using assets the company already owns.
• Putting one long, predictable repayment into the forecast instead of a shorter facility you'd have to refinance.

What it isn't good for is a gap in cash flow. A valuation and a charge take weeks, and by then the invoice you were waiting on has usually either landed or turned into a bigger problem.

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How to get a secured business loan

Lenders ask for much the same five things, whoever you apply to:

• The collateral: what the company owns, what it's worth, and whether anything is already charged against it.
• Financial statements, so the lender can satisfy itself that the company can afford the monthly repayments.
• Your business credit score. You can check yours free with iwoca Credit Compass, which shows your Equifax business credit score and what's affecting it before anyone else looks.
• A trading record. Secured lenders generally want an established one. There's no single threshold, and it varies by lender.
• Your personal credit history, as a director.

Then allow for the part that catches people out. Beyond the credit decision, the asset has to be valued, a security document drafted and signed, and the charge registered – and the 21-day clock on registration starts the day the charge is created, not the day the money lands. That sequence is why secured applications are measured in weeks while unsecured ones are measured in days.

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Where to get a secured business loan

Secured business lending in the UK comes from three places: the high street banks, the specialist business banks such as Allica, and independent lenders who fund against particular asset types. You can start most applications online, but a secured deal involves a conversation and a document pack whoever you go to, because someone has to value the asset and draft the security.

Alternative lenders are quicker, and most of what they offer is unsecured rather than secured. For a lot of companies, that's the real choice – not which secured lender to pick.

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What you gain, and what you give up

The gains are real. A lower rate, because the lender's risk is lower. A bigger loan, because the asset supports it. A longer term, so each repayment is smaller. Owning something valuable can open a door your accounts alone wouldn't – though not on its own, because the lender still has to believe the company can make the repayments. That's why a young company with a good asset often finds a secured loan harder to get than it expects.

What you give up is spelled out less often.

• The asset. If the company can't repay, the lender can enforce its charge: take it, sell it, and put the proceeds against the debt. If that doesn't clear the balance, the company still owes the rest, and a guarantor can be asked for it.
• Time, and money up front. Valuation, drafting, and registration add weeks, and the valuation is usually payable whether or not the loan completes.
• Freedom. A fixed charge means you can't sell or refinance the asset without the lender's say-so, and a debenture often bars you from offering the same assets to anyone else. The next lender reads that on your public record.
• Not the guarantee. Security and a director's guarantee aren't alternatives. Plenty of lenders ask for both.

Missed payments don't go straight to enforcement: the lender gets in touch, fees may apply, and a sustained default lets it call in the loan and enforce the charge. The earliest conversation is the one with the most options in it.

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Common questions about secured business loans

Does providing a personal guarantee make a loan secured?

No. A guarantee is a promise from a person; security is a right over a company asset. Both reduce the lender's risk, which is why they get confused, but they do it from different pockets. If the company can't repay, a secured lender enforces its charge over the asset, while a lender holding a guarantee pursues the guarantor's own money through the courts.

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How do secured loans differ from asset finance?

A secured loan is cash lent against something the company already owns. Asset finance pays for something you're buying, where the thing being bought is the security and the finance company usually owns it until you've finished paying. Both are secured in the broad sense, but only one of them gives you money to spend. If you're weighing the routes against each other, we've compared asset finance and an unsecured loan in detail.

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Does a secured loan hurt your credit?

Applying means a credit check, which leaves a footprint and can nudge your score down briefly. After that it's about conduct: repayments on time help, missed ones hurt. The difference with a secured loan is that the charge itself is public, so anyone looking at the company's record at Companies House can see that security exists, who holds it, and whether it has been satisfied.

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Are secured business loans easier to get than an unsecured business loan?

Easier if the company owns the asset, harder if it doesn't. Collateral lowers the lender's risk, so it can be more flexible about a patchy credit file. What it can't do is make an unaffordable loan affordable, or shorten the valuation and the legal work. For a company with no suitable asset, or one that needs the money this month, an unsecured loan is usually the more realistic route.

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Are secured loans less expensive than unsecured loans?

Usually, per pound borrowed, because the lender has recourse to the asset. Compare the total you'll repay rather than the headline rate, though: valuation and legal fees come on top, and a low rate over five years can cost more in pounds than a higher rate over one. Our guide to business loan interest rates has the published numbers and how to compare offers.

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Do banks prefer secured business loans?

They prefer the security. A charge improves what a bank recovers if a company fails, so the larger the loan, the more likely it is to ask for collateral. That doesn't automatically make a bank the right lender, though: the money is usually cheaper and almost always slower.

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Deciding whether to secure your borrowing

Put the asset question before the rate. If losing the asset would stop the company trading, a lower rate isn't a saving – it's a discount on a much bigger risk, and the honest answer may be to borrow less, or to borrow unsecured and pay more. Then work out what you'd repay in total over the period you really expect to hold the money, and what the charge does to the decision after this one: a debenture signed this year is still on the company's public record, and still being read, when you next want to borrow.

We lend unsecured, so we have a side in this. Said plainly: if your company owns a substantial, long-lived asset and wants to borrow against it over several years, a secured loan will cost less per pound than anything we offer, because the lender has recourse to your building and we don't. What the higher price buys is a decision in days rather than weeks, nothing of the company's tied up, and the option to borrow for a short period without committing an asset for a long one.

That's what an iwoca Flexi-Loan is for: a business loan with flexible repayment options, from £1,000 to £1m, for UK limited companies. We take no charge over your company's assets, and we don't secure lending against property. You choose a fixed term of between 12 months and five years, so you know the repayment schedule from the outset, and because there's no fee for repaying early you can clear it as soon as the cash arrives – many of our customers only take out our finance for a few weeks, or even days. A decision is typically made within 24 hours, though it might be longer depending on the complexity of the request, and a quick decision isn't a light one: we look at what the company can afford to repay before we make an offer.

What isn't free is the guarantee. Every new Flexi-Loan needs a personal guarantee from at least one director, so this isn't borrowing without security. It's borrowing without a charge over the company's assets.

Flexi-Loan in action: The Building Co. When The Building Co. landed a new project during a quieter period, founder Ray Iqbal needed to buy specialist equipment quickly. iwoca approved and funded Ray within 48 hours, helping him take on the opportunity without putting pressure on cash flow. The equipment is a company asset, with no charge over it. Read Ray's story

If the gap you're funding runs to months rather than years, see how our short-term business loans work.

The legislation and Companies House pages linked here, and our own terms, were checked on 20 October 2026. The Insolvency Service's guidance on personal guarantees was updated on 20 May 2026.