We helped Ruthin Castle Hotel use the value of their commercial property to secure finance

Secured business loans

If you want a business loan based on assets owned by your business, a secured business loan might be just what you’re looking for.

Secured business loans are suitable for businesses that own assets like commercial property, vehicles and machinery, or company directors that don’t want to offer a personal guarantee.

There’s a wide range of lenders offering secured business loans, and the amount you can borrow is based on the value of the asset(s) you have available.

What is a secured business loan?

It’s a loan secured by assets — valuable items owned by the business. This means that if your business can’t repay, the lender has the right to sell the asset to get their money back.

On the other hand, unsecured business loans aren’t based on assets, which means the lender will look at different criteria. If you’d like to find out more about both types, read more about secured vs. unsecured loans.

Business loans based on your business assets

If your business isn’t eligible for an unsecured loan, but owns assets like vehicles, machinery, equipment or commercial property, you may be able to use these business assets as security for a secured business loan.

Using an asset as security

Secured business loans are often described as a way of ’unlocking’ cash — they use existing items in your business as security. That means that you can take out a secured business loan based on the value of something your business owns.

Because the finance is secured against a physical asset, the lender has the extra reassurance that if things go wrong and you can’t keep up with repayments, they can take the asset to recoup their losses.

This lowered risk gives the lender more confidence in lending to your business, and often means they won’t require a personal guarantee or a deeper look into your credit history.

A range of assets accepted

The asset could be a variety of things: commercial property like a warehouse, yellow plant machinery, vehicles, and much more. The lender will need to know how you intend to use it and what it’s worth — but overall, the breadth of equipment accepted means that a secured business loan is open to a wide range of businesses in many sectors.

Secured loans: considerations

  • Often cheaper than unsecured lending because there’s less risk for the lender
  • The more assets you have, the more you can potentially borrow
  • No need to involve personal assets via a personal guarantee
  • The asset is the main focus: less emphasis on trading history or credit rating (although these still matter)

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