In UK business lending, a debenture is the document that gives a lender a charge over your company's assets as security for a loan. It is not the loan itself, and it is not a product you apply for – it sits beside the loan and sets out what the lender can claim if you do not repay. Sign one and it goes on your company's public record at Companies House, where every lender you approach afterwards can read it.

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What a debenture is

If you take out a business loan, you might be asked to sign a debenture. In the UK the term refers to a secured loan agreement between a lender and you, the borrowing company. It sets out which of the company's assets are security, how much you are borrowing, and the interest rate.

So a debenture is not a financial product you can go and get. The loan is the money and the repayment schedule; the debenture is the security sitting behind it, and one debenture can cover several loans from the same lender. If yours calls it a 'mortgage debenture', that is the same document under an older name.

You will also meet the word in a different sense. In the United States and in most textbooks, a debenture is a tradeable corporate bond – a debt security issued to investors, usually with no asset behind it. 'Debenture stock' means the same. Section 738 of the Companies Act 2006 is broad in the same way, covering any security of a company whether or not it creates a charge. In UK business lending, though, a debenture almost always creates one, and that is the kind this page is about.

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How a debenture works

A debenture means that if you default on your loan, your lender can claim against assets owned by your business – laptops, property, machinery. Not your personal possessions. In technical terms the lender 'places a charge over your business assets', and a charge is simply a security interest. It works a bit like a mortgage: if the company does not repay, the lender can claim certain assets.

Nothing is handed over on the day you sign. The company still owns everything and trades with it as normal, and while the repayments are made the charge does nothing at all.

Once the debenture is signed, the charge has to be registered at Companies House within 21 days. That matters more to your lender than to you. If nobody files it and the business goes under, the lender has no better claim on what it is owed than any other unpaid unsecured creditor.

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What's the difference between a fixed charge and a floating charge?

A fixed charge attaches to a named asset, such as your premises or one particular machine. A floating charge attaches to a whole class of assets that changes as you trade, such as your stock. Most debentures contain both, which is why lenders often call the document a 'fixed and floating charge'.

The difference decides what you can still do with your own property while the loan is outstanding.

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Fixed charges

A fixed charge secures the loan against something specific and identifiable: the freehold, a vehicle, a press, or a machine bolted to the floor. If you fail to repay, the lender has the right to take ownership of that asset and sell it to settle the balance.

The price of that is control. While the charge is in place your lender will usually not let you sell, scrap, or re-mortgage the asset without its consent. Book debts are often brought under a fixed charge too, which is why a lender may object later if you want to raise money against your unpaid invoices through invoice finance.

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Floating charges, and what happens when one crystallises

A floating charge attaches to a class of assets rather than one item – stock, raw materials, work in progress, computers, furniture. The lender accepts that what sits in the pool will change, as long as its value stays high enough to cover what you have borrowed.

That is what leaves you free to trade. You buy and sell stock as normal, and the charge follows whatever is in the pool rather than pinning down any one crate of it. Repay the loan and you have full control again.

It stops floating when things go wrong. On a default, on enforcement, or when the company goes into administration or liquidation, the charge 'crystallises' – it fixes onto whatever is in the class at that moment, and from then on you cannot deal with it.

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An example of how a debenture works

You run a retail store and want to borrow a large sum from your bank to open a second shop, using your current premises as security.

You and the bank sign a fixed charge debenture. It sets out the amount, the interest rate and the term, and records that the borrowing is secured against the original premises. The bank registers the charge, and from that point anyone who looks your company up can see it.

Repay on the agreed terms and nothing further happens. The facility ends, the charge is marked as satisfied, and the premises are clear again.

If the business goes into liquidation instead, the bank is paid out of the sale of the premises ahead of your ordinary suppliers. What it does not get is first claim on everything, which is the part most explanations of debentures get wrong.

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Registering the debenture at Companies House

Somebody has to send the charge to Companies House, and there is a deadline. The 21 days start the day after the charge is created, and any person 'interested in the charge' can file it – the company, the lender, or an agent. Usually the lender does, because the lender is the one who loses if it is late. Where there is an instrument such as a mortgage deed, a certified copy goes onto the public record with it. Filing costs £14 online or £24 on paper, a fee last changed on 1 February 2026.

Miss the 21 days and only a court can allow an extension. If the documents never arrive, section 859H of the Companies Act 2006 makes the charge void against a liquidator, an administrator, and any creditor of the company – and the money it secured becomes immediately payable. So a late filing does not quietly let the company off the debt. It turns a term loan into one the lender can ask for back at once.

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How to check what charges your company already has

Anyone can look this up, including you, and it is free. Find your company on the Companies House register and open its charges. Each entry shows when the charge was created and delivered, who is entitled to it, a short description of the property charged, and whether it is outstanding, part-satisfied, or fully satisfied.

Three labels do most of the work. 'Contains fixed charge' means at least one named asset is pinned down. 'Contains floating charge' means a changing class of assets is covered, and the register says separately whether that floating charge covers all of the company's property. 'Contains negative pledge' means the company promised not to give anyone else security over the same assets.

We read the same register from the other side. When a company applies to us we take its charge register from Companies House – those three labels, whether the floating charge covers everything, who is entitled to the charge, what it secures, and whether it is still outstanding. A debenture signed years ago is still legible in that much detail, to us and to everyone else you ask for money.

Our read of what that means for you is about timing. A debenture takes a morning to sign and then sits on the register until somebody files the form to remove it, so an old charge nobody tidied up is paid for at your next application rather than this one. It lands hardest on a company that borrows rarely: one facility, repaid, then forgotten.

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How to get a debenture removed once you have repaid

Clearing the loan does not clear the register. A charge is 'satisfied' when it has been paid off, and the form that tells Companies House is MR04. Nobody files it for you as a matter of course: 'you do not have to tell us when a charge is satisfied – but any satisfied charges left outstanding on our records could have a negative effect on your company'. It takes minutes, and the time to check is before you need a quick answer from somebody.

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What a debenture stops you doing next

A negative pledge is a promise not to create further security over the same assets without your lender's consent. It goes on the public register, so the next lender sees it before you mention it. With an all-asset debenture in place your balance sheet is effectively no longer available as security, and a second lender either takes a junior position, asks your first lender's permission, or declines. Where two are both willing, a deed of priority records who ranks where – normal business, negotiated between the lenders rather than by you, but it takes time you may not have.

Then there is the clause that decides how much the debenture covers. An all-monies clause makes it secure everything the company owes that lender, now and in future, rather than the one loan in front of you. Take a second facility from the same lender three years later and the original debenture may already secure it.

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What happens if your company cannot repay

A debenture gives a lender routes it would not otherwise have, and the quickest one does not involve a court. Under paragraph 14 of Schedule B1 to the Insolvency Act 1986, the holder of a qualifying floating charge over the whole or substantially the whole of a company's property can appoint an administrator without applying to one. An all-asset debenture is drafted to qualify.

Where the money goes after that is worth being precise about, because a debenture does not mean the lender is paid before everyone else. It depends on the charge:

• Out of the fixed-charge assets, the lender is paid first, after the costs of realising them.
• Out of the floating-charge assets, three things come first by statute: the expenses of the insolvency, preferential debts, and a slice reserved for unsecured creditors. Employees' wage arrears and holiday pay are preferential, and from 1 December 2020 so is HMRC for VAT, PAYE, and employee National Insurance. Corporation Tax stays unsecured.
• That reserved slice, the 'prescribed part' under section 176A, is 50% of the first £10,000 of what is left plus 20% of the rest, capped at £800,000 where the first floating charge was created on or after 6 April 2020.

Only then is the floating-charge holder paid. None of that touches a fixed charge, which is why lenders push for fixed charges over the assets worth having – and why yours may argue that your book debts belong under one.

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Types of debenture

Nearly all the variations you will come across describe one of two things: whether the debenture is secured, and when it has to be repaid.

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Secured debentures

In UK business lending this is the normal case. The lender takes a charge over the company's assets – fixed, floating, or both – and if you default they can be sold to pay off the debt. If a UK lender hands you a debenture, assume it is secured until you have read it and found otherwise. Secured business loans covers whether to secure your borrowing at all.

Unsecured debentures

An unsecured debenture, sometimes called a 'naked' debenture, creates no charge over anything. The holder relies on the company's promise to pay, and ranks with the ordinary trade creditors if the company fails. It is rare in UK business lending and common in the investment sense of the word – which is where most of the confusion about debentures being 'unsecured' comes from.

Redeemable debentures

A redeemable debenture has to be repaid by an agreed date, in one lump sum or by instalments. An ordinary fixed-term business loan secured by a debenture is a redeemable one, which is what almost all UK debenture lending looks like.

Irredeemable debentures

An irredeemable or perpetual debenture has no fixed repayment date. Section 739 of the Companies Act 2006 confirms these are valid: a condition making a debenture irredeemable, or redeemable only on a contingency however remote or after a period however long, is not invalid for that reason alone. Repayment comes on a winding up, on a contingency written into the document, or after a very long period. They belong to bond markets rather than small-company lending.

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What a debenture gets you, and what it costs you

What you get is access. Security lets a lender advance more than it would against your profits alone, and over a longer period, because what it stands to lose if things go wrong is smaller. That usually makes secured borrowing cheaper per pound than the unsecured equivalent rather than dearer – the opposite of what many debenture explainers say, because they are describing an unsecured investment instrument. It also leaves ownership alone: the lender gets a claim, not a share of your company.

What it costs you is flexibility, in the three places above – where you can raise money next, what you can do with a charged asset, and how quickly a lender can act if it loses confidence. None of that matters in a good year. All of it matters in the quarter when trading turns.

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What to check before you sign

A debenture is a legal document and nothing here is legal advice, so have a solicitor read yours. These are the points worth being clear on first:

1. Which assets are covered – named and fixed, a class and floating, or both – and whether your book debts are in there.
2. What it secures: this one loan, or everything you owe this lender now and in future.
3. Whether there is a negative pledge, and what it does to borrowing you have already planned.
4. What charges your company already carries, and whether an existing lender's consent or a deed of priority will be needed.
5. Who files it, and when.
6. The personal guarantee, which is separate. A debenture is the company's security over the company's assets, and signing one does not by itself put your personal assets at risk. A personal guarantee is a director's own promise, the two often arrive in the same envelope, and the second deserves as much attention as the first.

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Can a director take a debenture over their own company?

Yes. If you lend your own money to your company you can take a debenture over its assets and register it like any other lender, which puts you ahead of the ordinary unsecured creditors if things go wrong.

There is one trap. Under section 245 of the Insolvency Act 1986, a floating charge given for a debt the company already owes is invalid if the company becomes insolvent within 12 months – or within two years where it was given to a connected person, which includes a director. It stands only to the extent of money, goods, or services supplied at or after the charge was created. So taking security now for a loan you made two years ago generally does not work. Taking it when you put the money in does.

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Raising money without granting a debenture

A lot of business borrowing involves no charge over company assets at all, and it tends to take one of three shapes.

Unsecured lending takes no security over what the company owns, and the lender prices the extra risk in. Limits are usually lower and terms shorter, and unsecured business loans sets out what to expect. A personal guarantee often takes the charge's place, putting a director's promise where security over the company would otherwise sit. That is a different exposure rather than a smaller one.

Finance secured on one specific thing leaves the rest of the balance sheet alone. Invoice finance is secured on the invoices it advances against, and asset finance on the equipment or vehicle it funds.

That last distinction is worth holding on to, because a timing problem is not the same as a funding gap: the money is needed before the cash arrives, not instead of it. An iwoca Flexi-Loan is built for that shape. If you're waiting on an invoice, a Flexi-Loan can cover the gap, and you can clear it with no early repayment fee once your customer pays. We lend to UK limited companies from £1,000 to £1m, and every new Flexi-Loan needs a personal guarantee from at least one director.

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Debenture FAQs

What is another name for a debenture?

A fixed and floating charge, a debenture deed, a security agreement, or a mortgage debenture. They all describe the same document, and Companies House simply calls it a charge.

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Is a debenture long term or short term?

Neither in itself. A debenture lasts as long as the borrowing it secures, which might be a few months or a decade. The registration outlasts both: the charge stays on your company's record until somebody files the MR04 to say it has been satisfied.

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Do debentures have a fixed or a floating interest rate?

This is a mix-up worth clearing up. 'Fixed' and 'floating' describe the charge over your assets, not the interest rate. A debenture can secure a loan at a fixed rate or a variable one, and the rate is set in the loan agreement rather than by the type of charge.

Every statutory reference and the Companies House fees on this page were checked against legislation.gov.uk and gov.uk on 20 October 2026.