Secured business loans

A business loan secured by some sort of asset. The security can be property – owned by the business or privately, other assets such as vehicles, plant or machinery or even personal possessions such as fine art or classic cars.

Why should I provide security?

Banks and other lenders would always prefer to lend on a secured basis.

If they are secured and you default, they have the right to repossess the security offered.(Although you can protect yourself with insurance in case this happens!)

Unsecured business loans are available if security is not available but if you have security it’s worth looking at both options.

The most important part of the equation is that the loan is affordable for the business so that it won’t go wrong! So if that means offering security then this may be a better plan that mistakenly trying to protect everything you have!

By recourse we mean that the lender could repossess and sell the asset in the event that payments are not made, in the same way as if you are unable to pay your mortgage you could lose your home.

So that all sounds pretty bad?

Securing a business loan means that the interest rate is likely to be lower and the term longer. So, even though the loan amount might be higher the monthly payments could be much lower.

Personal Guarantees

When arranging finance for your company you, and other directors will often be expected to guarantee the loan.

That means, that even if the loan is unsecured, the lender can demand payment from any of the directors personally. (Hence you are the guarantors of the loan).

What this means is, even though you might not have wanted to risk your home or other property, signing the guarantee is doing just that.

So – how can you protect your assets?

Your advisor can help here with Personal Guarantee Insurance.

For a small fraction of the loan amount, you can protect yourself from the guarantee being called in. If that happens, the personal guarantee insurance will protect demands of up to 80% of the guarantee.

Ask for more information on personal guarantee insurance

Business loans – frequently asked questions

What is a secured business loan?

What is the interest rate on a secured business loan?

Can you secure a loan against a business?