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Secured business loans

Discover how secured business loans can help you and your company

published: 09 December 2022
Read time: 5 minutes

Secured business loans give companies the chance to access much-needed funding by providing assets as a form of security. Our guide explains how they work and how they might suit your business.

What are secured business loans?

Secured business loans are a type of business financing that allows firms to borrow money by putting down assets as security.

This means that if you happen to default on your loan and can’t repay your debt, your lender has the right to repossess the assets you’ve provided as collateral and recover their funds.

You can use secured business loans to cover the cost of any business-related expenses from buying new equipment and tools to paying your staff and expanding your premises.

Secured business loans are often considered a low-risk lending option for lenders, meaning that you might be able to get access to bigger loans at more competitive interest rates.

How do secured business loans work?

Secured business loans work in a similar way to other types of commercial loans, but require assets and collateral as a form of security.

When it comes to deciding what type of assets you should put down, your lender may already have in mind what kind of collateral they need. This could range from valuable equipment and existing inventory to land and property.

Once you have researched possible lenders, determined your loan specifics, gathered your documents, and applied for financing, you’ll probably receive the money as a lump sum.

As with most loans, you’ll then owe interest on the total amount and make regular, monthly repayments until the loan is paid back in full.

What is the difference between unsecured and secured business loans?

Unlike unsecured loans, secured business loans need to be backed by some sort of collateral.

With secured business loans, lenders take on less risk as you’ve put down your commercial possessions as security. This means that you’re likely to benefit from more favourable terms, including higher borrowing amounts and lower rates.

Unsecured business loans could be a valuable option for new companies that don’t yet own any assets. Not only that, but the application for unsecured loans tends to be quicker, as lenders don’t need to spend time evaluating assets or collateral.

What are the advantages and disadvantages of secured business loans?

Secured business loans have pros and cons, such as:


  • Larger loan amounts. Your company could borrow a larger sum of money because the amount available to borrow is partly determined by the value of the assets you decide to put down as security. The more valuable the collateral, the larger the amount of money you can borrow. 

  • Lower interest rates. Since secured business loans are a lower risk type of business financing for lenders, it’s likely that borrowers benefit from a more affordable interest rate than they would with an unsecured loan.  

  • Longer repayment terms available. Borrowers can often enjoy longer repayment terms, giving you the chance to budget and manage your loan better and allowing you to focus on growing and developing your firm.


  • Your assets are at risk.  You need to provide assets as security and you may end up losing the possessions you’ve put down as collateral should you be unable to repay your loan. 

  • Longer application process. When applying for a secured business loan, it is likely you will have to wait longer for the process to be completed. This is because the lender will evaluate what you’ve put down as security before accepting the application.

What type of assets can I use to get secured business loans?

There are many different types of assets you can use to secure your commercial loan. These are often divided into tangible and intangible assets.

Tangible assets are those possessions that are physical and can be touched. For example, these can be anything from property and land to equipment, vehicles, and stock.

Intangible assets stand for non-physical possessions, such as trademarks, copyrights, licences, intellectual property, and so on. These can be more difficult to value than physical assets and may only be considered by specialist lenders.

Does my business qualify for secured business loans?

If you’re hoping to take out a secured business loan, your company will need to meet specific eligibility criteria.

Lenders will often take into consideration a variety of different factors, including the type of business, trading history, and minimum annual income.

Some lenders will also ask to see your business plan, as it is likely to show how you’ll invest the borrowed money. Ultimately, all this information will allow the provider to understand and predict whether you’ll be able to pay back your loan or not.

The company you are borrowing the money for must also be located and registered in the UK.

How much funding can my company get with secured business loans?

The amount of money you can borrow is partly determined by the value of the assets you decide to put down as security.

For example, if you need to borrow £50,000, then you will need to put down assets that are worth that amount.

Just having assets worth the loan amount will not be enough. Lenders will also look at your company’s credit score and revenue to determine whether loan repayments will be affordable.

Other useful guides

We have a range of guides to help you learn more about business loans:

How to get a business loan

Bad credit business loans explained

Small business loans guide

Search the market and find the right business loan for you

Lenders offer a wide range of secured business loan options and the easiest way to compare all the loans available in one place is by using MoneySuperMarket.

Simply tell us a little about your financial situation and what kind of loan you’re looking for, including what you’ll be spending the funds on. We’ll search the market and give you a list of competitive offers.

Once you’ve decided, you can click through to the provider and get the process started.

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