A secured business loan is a financing option where you use assets, such as property, equipment, or invoices, as collateral to guarantee the loan. This type of loan reduces risk for lenders, making it easier to secure approval, access larger loan amounts, enjoy lower interest rates, and benefit from longer repayment terms compared to unsecured loans.
Fundrocket offers tailored secured business loans to help UK businesses access the funding they need for growth, expansion, or operational stability. Whether you’re looking to invest in new equipment, hire additional staff, or manage working capital, our secured loans provide the financial flexibility to meet your goals.
A manufacturing company requires £500,000 to upgrade its production line. They use their commercial property as collateral. After valuation, the loan is approved with an interest rate of 8% and a repayment term of 20 years, ensuring manageable monthly payments.
Unsecured business loans are quicker and simpler to arrange, making them ideal for businesses that need fast funding without tying up their assets.
Unsecured loans are a popular choice for small and medium-sized businesses because they offer:
1
Lower Interest Rates
Because the loan is backed by assets, lenders face less risk, allowing them to offer competitive interest rates.
2
Larger Loan Amounts
The amount you can borrow depends on the value of the assets you provide as security. In some cases, you can borrow up to 100% of the asset’s value.
3
Longer Repayment Terms
With extended repayment terms, businesses can enjoy lower monthly installments, reducing cash flow strain.
4
Easier Approval for Startups or Businesses with Poor Credit:
Lenders focus more on the value of the assets than on trading history or credit scores, making secured loans accessible to startups and businesses with less-than-perfect credit.
Asset Risk:
If your business fails to meet repayment obligations, the lender can seize the assets used as collateral.
Upfront Costs:
Asset valuation and legal fees may apply. These costs are typically paid upfront and can vary based on the asset type.
Longer Approval Times:
The need for asset valuation and legal processes means secured loans often take longer to arrange compared to unsecured loans.
Total Loan Cost:
While interest rates are lower, borrowing over a long term can result in higher overall costs due to the extended repayment period.
Tangible Assets:
Commercial property (offices, warehouses, retail spaces)
Vehicles (trucks, vans, company cars)
Equipment or machinery
Intangible Assets:
Accounts receivable (used in invoice finance)
Unsold inventory
Personal Assets:
In some cases, personal property, such as residential property or shares, can be used as collateral.
Pros
1
Fast and Simple
2
No Collateral Required
3
Predictable Repayments
4
Low Upfront Costs
1
Higher Interest Rates
2
Smaller Loan Amounts
Typically lower than secured loans.
3
Personal Guarantees
Some lenders may require a director’s guarantee, increasing personal risk.
Typical Range
£5,000 to £5 million.
Loan-to-Value Ratio:
Most lenders allow borrowing of up to 50-70% of the asset’s value, with some offering 100% for high-value assets.
A retail business owner uses their commercial property worth £1 million to secure a £700,000 loan. The funds are used to renovate their store, hire additional staff, and invest in a marketing campaign. The lower interest rate and extended repayment term make monthly payments affordable.
Leverage your assets for better financing. Apply for a secured business loan with Fundrocket today and get the capital you need to grow your business.
Asset Identification:
Determine the asset(s) you want to use as collateral.
Application Submission:
Provide information about your business, loan purpose, and asset details.
Asset Valuation
The lender assesses the asset’s value and suitability.
Approval and Terms:
Review and agree on the loan offer, including repayment terms and interest rate.
Funds Disbursement:
Receive funds and begin repayments.
For better financing
Leverage your assets. Apply for a secured business loan with Fundrocket today and get the capital you need to grow your business.