Secured Business Loans

A secured business loan lets you borrow against property, making it ideal for larger funding needs or if you have limited credit history. Get better rates, higher amounts, and flexible terms up to 15 years, including interest-only options.

WHAT IS REQUIRED

A Residential or Commercial property in the UK

Proof of income

Property details

Bank statements - business and/or personal

WHY CHOOSE IT?

Longer repayment terms to better manage cash flow

Interest only options available

Suitable for weaker credit profiles

Refinancing or restructuring debt

What is a Secured Business Loan?

A secured business loan is a type of funding where the borrower offers property as collateral to secure the loan either as a 1st, 2nd, 3rd, or equitable charge. Loan amounts typically start at £20k, with repayment terms ranging from 6 months to 15 years, with interest only options too. The value of the collateral will determine how much you can borrow, typically no more than 75% Loan-to-Value, including any other charges. As the loan is secured against assets, borrowers with less-than-perfect credit or shorter trading history may still be able to access larger amounts of funding, making it an attractive option for businesses that might struggle to qualify for unsecured loans.

How does a Secured Business Loan work?

Application: Your business and director details are submitted to the lender, along with information about the property being used as collateral and loan requirement.
Approval Process: Lenders conduct land registry searches and assess the value of the collateral, along with your business's financial health and credit history. Approval times may vary depending on the lender.
Valuation: If an Automated Valuation Model (AVM) is not used, a surveyor will need to assess the property to ensure its value supports the requested loan amount.
Funding: Once approved, the legal team is instructed to complete all necessary procedures before the loan is disbursed as a lump sum.

Repayment: Repayments are made in fixed weekly or monthly instalments over the agreed loan term.

Is a Secured Business Loan suitable for my business?

A secured business loan is particularly useful for businesses that need:

Larger loan amounts that may not be available through unsecured loans.
Longer repayment terms (e.g., up to 15 years) to help spread the cost of borrowing, making it easier to manage cash flow.
Flexible repayment options, such as interest-only periods, providing short-term relief and enabling you to focus on growing your business.
A better chance of approval even if you have less-than-perfect credit, as the collateral reduces the lender's risk.

While secured loans are a great option for businesses with collateral, it's important to remember that failure to repay could put your property at risk of repossession.

What is required for an application?

Each lender may have their own specific requirements, but at a minimum, you'll need to provide the following:

Proof of business income: Typically, this includes the last 6 months' business bank statements and your most recent financial accounts.
Property details: Information about the property being used as collateral, including the property address, estimated value, details of any outstanding mortgages or charges, the property type, whether you reside in it or rent it out.
Purpose of the loan: A clear explanation of how the funds will be used to benefit the business.
Directors' details: Full names, dates of birth, and a 3-year address history for each director.

FAQs

How quickly can I get a secured business loan?

Approval and funding timeframes can vary but typically range from 3-7 business days, to 3-6 weeks, depending on the lender, loan request, and asset valuation process.

What interest rates can I expect?

Interest rates vary depending on the security property and your business’s financial health.

Can I apply with bad credit?

Yes, secured business loans are often available to businesses with bad credit, as the collateral reduces the lender’s risk. However, the interest rate may be higher.

Do I need to provide a personal guarantee?

While most secured loans do not require a personal guarantee, some lenders may still request one in addition to the collateral.

Can I use any asset as collateral?

Most residential and commercial properties in England, Wales and Scotland can be used as security for a loan.

Can I repay the loan early?

Most lenders allow early repayment, but there may be early settlement fees, and you may not save on interest. Always check the terms before committing.

Can I apply for a secured loan if I’m a startup?

Startups can apply for a secured loan if they have property to use as collateral. Lenders may also require a strong business plan and personal credit history as part of their assessment.

Can I have multiple secured business loans?

When taking out a secured business loan, you can have up to three charges on your property, including your mortgage. These are known as 1st, 2nd, and 3rd charges, and they represent the order of priority in which lenders will be paid back in case of default. - A 1st charge means the lender has the primary claim to the property if the loan isn't repaid. - A 2nd charge comes after the 1st charge lender, but before any 3rd charge lenders. - A 3rd charge is the lowest priority, meaning if the property is sold, the 1st and 2nd charge lenders are paid first. As you move from a 1st charge to a 3rd charge, the available Loan-to-Value (LTV) may decrease, as lenders see additional charges as increasing the risk. This could result in a lower loan amount being available to you. Keep in mind that the more charges on the property, the higher the risk for lenders, so securing a 3rd charge may become more challenging. In some cases, lenders may place an equitable charge on the property, which does not give them the same rights as a registered charge but still provides a legal interest in the property. An equitable charge may be used to secure loans in certain situations where a full legal charge is not possible.

How much can I borrow?

Loan amounts typically start at £20,000+ and the size of the loan is primarily determined by the value of the security property, the business's affordability, and the lender's specific criteria. The loan amount will largely be influenced by the property's value and any existing charges against it.

I am a sole trader or partnership, can I apply?

Yes, secured business loans are available to sole traders, partnerships, LLPs, and Ltd companies. However, sole traders and partnerships may face fewer options.

Ready for a bespoke service?

Get in touch with us today to find the smartest solutions for your finance needs

Call us

Email us

We know business finance so you don't have to.

Choice Loans is a broker, not a lender. We will connect you with a lender suitable for your needs or, if appropriate, a specialist broker. We do not charge you an upfront fee but, if your application is successful, a broker commission may be charged.