Secured Small Business Loans

A secured business loan is a way of businesses being able to borrow a sum of money by providing an asset as security, also sometimes known as collateral. The asset which is put forward as collateral in a secured business loan in the UK lowers the risk to the lender, especially when compared with an unsecured loan. This might enable a higher sum to be borrowed by the business. 

This is because if the business is not able to repay the loan, the lender can use the asset that was put up for security to recover the funds they are owed.  

Secured business loans can sometimes have several benefits in comparison to some other types of borrowing, depending on the individual circumstances involved, including: 

• Larger sums are often available to borrow than would be with unsecured loans
• Due to the lower risk to the lender, businesses with a poor credit history, or limited credit history, are often able to borrow through a secured loan when they may not be able to borrow through other means
• Quick payment of the loan sum is often available once the loan has been agreed and paperwork completed

Secured business loans work by an asset being put up for security for the borrowing, so that if the business is unable to repay the loan, the lender can use the asset to recover the money they lent. Repayments are made regularly by the business until the loan (including the interest charged on the sum borrowed) has been repaid in full. 

Once the secured business loan has been repaid in full, the lender will no longer have any claim on the asset that was put up for security. 

Businesses are often able to borrow more with a secured loan than with an unsecured loan, as the asset that the loan is secured on will lower the risk level for the lender; therefore, they are usually able to lend a higher sum.  

The actual sum that you can borrow will depend on the value of the asset(s) and the individual circumstances involved. The value of the asset will need to be higher than the sum you wish to borrow. The lender will evaluate your application and the value of the asset(s) and let you know how much you can borrow with a secured business loan. 

You can get an estimate of what you might be able to borrow using a specific asset as collateral by using our secured business loan calculator. 

At Capify, our secured business loans are only ever secured on residential property which is owned by the business owners or guarantors. We also require personal guarantees from the major shareholders of the business for this type of loan.  

A personal guarantee is a legal agreement that the business owner or shareholder (known as the guarantor in this instance) will repay the loan if the business is unable to.  

The property that is put up for security must be: 

• Registered in England or Wales 
• The home address of the guarantor or a buy-to-let portfolio owned by the guarantor 

You can find out more about excluded properties for our secured business loans here. 

Yes, if the business or the guarantor(s) are not able to repay the secured business loan, the lender can legally gain possession of the asset in order to recover the money owed for any outstanding debt.

As a secured business loan uses an asset as security for the sum borrowed, there is significantly less risk to the lender than with other types of borrowing. With an unsecured loan, for example, the lender has to rely heavily on the business’ credit history to assess the level of risk that they will repay the loan. With a secured business loan, the asset used as collateral mitigates much of that risk, along with the personal guarantee(s) of those involved in borrowing the money.  

At Capify, we treat each lending decision individually and look at a variety of different information. We understand that a credit history doesn’t always tell the full story of a business right now and we take circumstances, such as the challenges of recent years, into consideration.