Secured business loans are suitable for businesses that own assets like commercial property, vehicles and machinery, often combined with trade receivables. In such situations it is less likely that the company directors will be required to offer a personal guarantee.
There’s a wide range of lenders offering secured business loans, and the amount you can borrow is connected to the value of the asset(s) you have available.
It is a loan secured by assets — valuable items owned by the business. This means that if your business cannot repay, the lender has the right to sell the asset to get their money back.
Secured business loans are often described as a way of ’unlocking’ cash — they use existing items in your business as security. That means that you can take out a secured business loan based on the value of something your business owns.
Because the finance is secured against a physical asset, the lender has the extra reassurance that if things go wrong and you cannot keep up with repayments, they can take the asset to recoup their losses.
This lowered risk gives the lender more confidence in lending to your business, and often means that the interest rate will be lower, they will not require a personal guarantee or may not require a "clean" credit history.