Secured Business Loans UK
Get The Best Secured Business Loan Deal
A secured business loan may allow you borrow more money – get the best deal with ABC Finance
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Author: Gary Hemming CeMAP CeFA CeRGI CSP
20+ years experience in business loans
Secured business loans are a great option for company owners who are looking to raise finance for their business. They allow you to raise money against your home or your business premises, to take your business to the next level.
This type of business loan allows you to borrow higher amounts, at better terms and often at lower rates than unsecured business loans.
At ABC Finance, we’ve been arranging secured business loans for businesses since the year 2000. Get in touch now and get the best deal with ABC Finance.
What is a secured business loan?
A secured business loan is a type of business loan that sees you offer the lender security over an asset in exchange for a loan.
By offering collateral, you are reducing the risk of financial loss for the lender and as such, may be able to secure better terms on your loan.
They can be used for almost any purpose and allow you to borrow over a longer term than would be possible using unsecured loans. Usually up to 25 years. These types of loans are ideal for businesses that aren’t able to borrow using an unsecured loan or would like to benefit from a larger loan or lower interest rate by offering the lender security.
What assets can I used for a secured business loan?
The assets used as collateral for a secured business loan are usually property – either your home, your business premises or an investment property.
It is possible to use other types of assets to secure finance for your business, although strictly speaking, these are not secured business loans. The other secured finance types that can be used to raise funding for companies are:
- Asset finance – Asset financing is a type of funding that can be used to purchase or refinance equipment for a business. It is also known as equipment finance.
- Invoice finance – Invoice finance allows you to borrow money against the invoices that you have raised, but have not yet been settled. It can be broken down further into invoice factoring and invoice discounting. This is ideal for businesses that accept payment on 30-90 day payment terms.
- Merchant cash advance – A merchant cash advance allows you to borrow money against your future card receipts.
What are the key terms and criteria?
Our loans are available for any amount from £26,000 – with no maximum loan size.
Unlike unsecured loans, secured business loans can be taken for up to 25 years. This results in lower monthly payments, easing the burden on your business’s cash flow. The interest rate charged on a secured loan is usually much lower than a comparable unsecured loan. This is due to the reduced risk of financial loss to the lender, should the borrower fail to keep up their repayments.
How much money can I borrow?
We can offer secured loans for businesses from £6,000 – £10 million.
The amount you can borrow will usually be decided based on the loan to value (LTV) of your loan and how much you can afford to repay.
We can offer loans up to a maximum of 75% of your property value.
Will my company qualify for a secured business loan?
There is a strong chance that your business will qualify. Secured loans are easier to qualify for than an equivalent unsecured loan.
As long as you can offer suitable security, at a level of gearing (loan to value for a loan that uses a property as collateral) and you meet the lender’s affordability rules, there is a great chance that you’ll be approved. We work with the leading lenders across the market, so if you do qualify, we will be able to find a suitable option for you within an hour of our first phone call.
The pros and cons of secured business loans
When considering secured or unsecured finance for your business, there are several factors to consider. Each business is different and the way they collect payment also differs greatly.
There is no one size fits all product when it comes to business borrowing, and no ‘best’ product. Each business must consider which option best meets their needs.
We have broken down a number of the pros and cons of secured lending to make that process simple.
Pros
Secured lending is usually cheaper, due to the reduced risk to the lender.
Secured lenders will allow you to borrow the money over a longer term, reducing your monthly repayments.
The addition of security usually allows you to borrow more money than would be available on an unsecured basis.
Adverse credit can cause a major problem during unsecured business loan applications. Secured lenders tend to take a more relaxed view on previous issues, where there is a good reason for them.
Cons
As the security will need to be valued and a legal charge placed on the property, there will be fees to pay upfront. The valuation and legal fees must be paid during the application process, meaning you will have to spend money before you receive your loan. In addition, if the valuation is unfavourable, then the loan may even be declined, meaning the valuation fee is wasted.
When borrowing over a longer term, the total interest charged will usually be higher. You should consider the total cost of the loan before moving forward.
To secure a loan against something, you need the asset in the first place. If you don’t have suitable assets, you should consider another type of business funding.
Due to the additional checks, including the valuation and legal process, applications take longer to complete than unsecured borrowing. Applications can take several weeks, depending on the lender.
How long will it take to receive the money?
The fastest completion timescale is 24 hours, although this is rare.
In most cases, applications complete in around 10 days – 21 days. Some lenders are quicker than others, so if you’re looking to complete quickly, let us know upfront and we’ll focus our choice of lender on only the quickest in the market.
Alternatively, if you need funds urgently, we offer a range of unsecured fast business loans that will be quicker that secured lending in most cases.
How to get started
Although each lender has their own methods of processing applications, there are common details that are needed by all lenders.
We discuss your needs over the phone and will ask any relevant questions during the initial call. In general, we will ask you the following:-
- The security offered and the value of it (plus any outstanding loans already secured by it).
- The trading performance of your business (turnover and net profit especially).
- How much you’re looking to borrow and for how long.
- The reason for the loan.
- Details of your business and what it does.
- Details of the directors and major shareholders of the business.
- Information about the credit history of the business and its shareholders and directors.
Of course, depending on your individual circumstances, additional information may be required.
What is the application process?
Once your application has been assessed and a suitable lender chosen, you will be provided with a quote.
At this point, a formal application can be made, and supporting information must be sent to the lender to allow them to fully assess your application.
Once everything has been checked and approved, a valuation of the security may be required be required although an electronic valuation may suffice. Should everything go as expected here, a formal offer can then be issued.
Once you have checked and signed the offer, the loan will be legally executed, and a charge registered against your security. The funds will then be paid into your account to use as planned.
What are the main uses for secured business loans?
They can be used for almost any business-related reason. Common uses include:
- To Purchase a new business
- To provide a cash injection into the business
- To fund stock purchases
- To invest in marketing
- To purchase or upgrade equipment
- To refinance expensive debt, reducing the cost of borrowing
Why should I work with ABC Finance?
At ABC Finance, we have been helping business owners raise finance since the year 2000. We’re an FCA regulated company and have an average review of 4.8 out of 5 across the main review sites.
We’ve built our reputation on helping borrowers save money on their funding needs, completing the application quickly and offering top quality support throughout the process. Get in touch today and get the best deal with ABC Finance.
Frequently Asked Questions
What if I don’t have any property or assets?
If you’re looking for a business loan but don’t own any property or assets, you have two options.
Firstly, you may be able to secure your loan against a guarantor’s assets or property, if the owner of the asset is happy to help. Of course, their assets will then be at risk should you fail to keep up the repayments on the loan.
If this is not an option, you should look at other business finance options such as unsecured business loans, business cash advances or debt factoring.
Will my assets be at risk?
Yes. As you are securing the loan against your assets, you may lose them if you fail to make the repayments as agreed with the lender.
Although this would most likely not happen immediately, failure to keep up repayments would ultimately result in repossession.
Why are secured loans cheaper than unsecured loans?
As the loan presents less risk to the lender, they are usually happy to lend at lower rates, as their risk of losing money is greatly reduced.
This also means that the better the security offered is, the lower your interest rate is likely to be.
Can you still offer my company finance if I have bad credit?
Yes, even if you have bad credit, there is a great chance that you’ll be approved for secured finance.
As long as you can offer suitable security, at a level of gearing (loan to value for a loan that uses a property as collateral) and you meet the lenders affordability rules, there is a great chance that you’ll be approved.
In fact, we offer a range of specialist bad credit business loan products.
