A secured business loan is a type of secured loan designed for businesses that own commercial property, vehicles, machinery, or other equipment and can be used by directors who do not wish to provide personal guarantees. There are many options to choose from and the amount you can borrow depends on the value of the asset you are using as collateral.
Secured loans require collateral, an asset that could be taken from you if you don’t repay the lender. The type of loan you choose affects your credit requirements for the loan as well as the interest rates and loan amounts you might get. Secured loans can be useful if you need to borrow a large sum of money, typically more than £10,000. The term ‘secured’ refers to the fact a lender will need something as security in case you can’t pay the loan back. This will usually be your home. Secured loans can be useful if you need to borrow a large sum of money, typically more than £10,000. The term ‘secured’ refers to the fact a lender will need something as security in case you can’t pay the loan back. This will usually be your home.
How do secured business loans work?
A secured business loan works like any other type of business finance. Lenders agree to lend the business a certain amount based on the value of the business assets they are using as collateral and the circumstances and needs of the business.
The process can take several weeks, depending on the lender and the complexity of the business situation. Your property needs to be valued, and if you are offering real estate as collateral, the lender will likely impose legal fees on it.
Most secured business loans come with a fixed interest rate, so you can expect to pay back the loan amount (plus interest) each month. You can choose short-term, medium-term or long-term secured business loans depending on your needs and eligibility. Most lenders will lend you up to his 100% of the property value.
What assets can I use as security?
Fortunately, the majority of lenders accept a variety of tangible and intangible assets as collateral, making secured commercial loans an accessible option for a wide variety of sectors. Common tangible fixed assets include land, land, machinery, equipment and vehicles. You can also secure your receivables against the loan.
Intangible assets include trademarks, copyrights, intellectual property, licenses and patents. Depending on the lender, you may be able to offer multiple assets or your own personal assets. A personal guarantee may also be required.
Where can I apply for a secured business loan?
You can apply for a secured loan from a reputable loan broker today via our Financing Options Platform. The process is quick. You will usually receive a decision within 24 hours. Tell me how much you need to borrow and for what purpose. Our technology-driven staff compares over 120 lenders to match your business with the right financing options for your needs.
Advantages of Secured Loan:
While the potential to lose your collateral is a clear drawback of secured loans, there are also distinct advantages over unsecured loans:
- Larger loan amounts: When you secure a loan with collateral, such as property or cash, you can borrow a lot more than if you don’t have collateral.
- Easier qualification requirements: You might find that you can have a higher debt-to-income ratio – your debt compared with your income – than if you were applying for an unsecured loan.
- Lower interest rates: The interest rate for an unsecured loan could be higher than for a secured loan because the latter has a secondary source of repayment, such as property or cash. More risk is involved in an unsecured loan, and the higher interest rate reflects that.
To find out if you qualify for a secured business loan, apply here.