What Security Do Lenders Typically Accept for Secured Business Loans?

Short summary: Lenders commonly accept commercial property, company assets (plant, machinery, vehicles), receivables/invoices, debentures (fixed and floating charges), bank/cash charges and personal guarantees as security for secured business loans. The choice depends on loan type, lender risk appetite and asset quality — and will influence loan size, Loan‑to‑Value (LTV) and interest cost. Start a Free Eligibility Check to see what your business will likely need: Get Quote Now.

Key takeaways

• Common security: commercial property, company assets, invoice book, vehicles, and debentures.
• Security increases borrowing capacity and may lower rates, but it creates enforcement risk if repayments fail.
• Different lenders prefer different security depending on loan purpose — match matters. business finance options vary.
• To get matched quickly, start a Free Eligibility Check: Free Eligibility Check.

Why security matters

Lenders take security to reduce loss if a borrower defaults. Acceptable security can raise the maximum loan size, affect the interest rate and determine how quickly a lender will make funds available. High-quality, easily valued security (e.g., commercial property) gives lenders confidence — while assets that decline quickly in value (e.g., obsolete stock) are less favoured.

What is a secured business loan?

A secured business loan is a facility where the borrower grants a lender a legal interest in an asset (or assets) as collateral for the loan. If you repay, the charge is removed; if you don’t, the lender may realise the asset to recover funds. Secured loans are common for commercial mortgages, bridging finance, larger term loans and many asset finance products. UK Business Loans helps match limited companies and trading businesses (loans from around £10,000 upwards) with lenders or brokers who accept different security types.

Types of security lenders commonly accept

Commercial property (mortgage / legal charge)

What it is: A first or second legal charge over freehold or long leasehold commercial premises.

Typical LTV: 50–75% depending on property type, location and borrower strength.

Who uses it: Commercial mortgage lenders, bridging lenders and development finance providers.

Pros: High-quality, stable security — usually yields the best LTVs and rates.

Cons: Valuations, legal costs and longer completion times; second charges reduce priority.

Tip: Provide recent commercial valuation and tenancy schedule to speed approval.

Residential property (director personal mortgage / cross‑collateralisation)

What it is: A director or shareholder grants a charge over a residential property (owner-occupied or buy‑to‑let) to secure a company facility.

Typical LTV: Often conservative (50–70%) and lenders may limit use or require personal guarantees too.

Who uses it: Some specialist commercial lenders and bridging financiers.

Pros: Can unlock larger facilities when business assets are limited.

Cons: Puts personal property at risk; may require solicitor involvement and personal consent.

Tip: Confirm with your solicitor what personal exposure you accept before offering residential security.

Debentures — fixed and floating charges

What it is: A company debenture registers a lender’s charge over company assets. A fixed charge secures specific assets; a floating charge covers a changing pool (stock, receivables).

Typical LTV: Varies hugely by asset quality and lender; floating charges often support working capital lines rather than large term lending.

Who uses it: Specialist commercial lenders and banks for larger facilities.

Pros: Flexible for businesses with changing current assets; lender gets broad protection.

Cons: Floating charges rank behind fixed charge holders and certain preferential creditors on insolvency.

Tip: Understand the order of priority — request an explanation from any lender before signing.

Business assets & equipment (asset finance / hire purchase)

What it is: Specific assets (plant, machinery, production equipment, medical devices) are used as security — often via hire purchase or a chattel mortgage.

Typical LTV: Often 60–100% of the asset value for new equipment; lower for used items.

Who uses it: Asset finance lenders, manufacturer finance arms, specialist brokers.

Pros: Preserves cashflow; financing tied directly to the asset being purchased.

Cons: Repossession risk if you default; assets must be maintained and insured.

Tip: Provide maintenance history and photos for used equipment to speed underwriting.

Vehicles / fleet (HP, finance lease or chattel mortgage)

What it is: Vehicles are financed against the vehicle itself.

Typical LTV: 60–100% depending on vehicle age and mileage.

Who uses it: Vehicle finance lenders, fleet funders.

Pros: Straightforward for fleets; specialist funders understand depreciation.

Cons: Always check mileage/condition covenants and early termination costs.

Inventory, stock and receivables (invoice finance / stock finance)

What it is: Lenders take a charge over debtor book (invoice finance) or stock as security for working capital facilities.

Typical advance rates: 70–90% of invoice value for approved sales ledgers; stock advance is lower and more conservative.

Who uses it: Invoice finance providers, stock financiers and factors.

Pros: Converts working capital into cash quickly; scales with sales.

Cons: Fees, ongoing monitoring and possible reserve/holdback amounts.

Tip: Ensure your sales ledger is clean and your debtor terms are well documented.

Bank account or cash security (blocked/charged accounts)

What it is: Lenders may take a charge over a business bank account or require cash to be held in a blocked account.

Who uses it: Short-term lenders, high-risk facilities and some bridging lenders.

Pros: Easy to enforce; reduces lender risk.

Cons: Reduces company liquidity and flexibility.

Guarantees & personal security (director personal guarantees)

What it is: Directors or shareholders provide personal guarantees, sometimes secured by personal assets (home, investments).

Who uses it: Most lenders ask for personal guarantees for small/medium company borrowers.

Pros: Improves lender confidence and may secure better terms.

Cons: Personal exposure — guarantors can be pursued personally if the company defaults.

Tip: Negotiate scope and limits of guarantees (e.g., time-limited or capped amounts).

Charges over shares / parent company guarantees / third‑party security

What it is: Security can be over shares in a company, or provided by a parent/group company or third party.

Pros: Useful in group structures where subsidiaries lack sufficient standalone security.

Cons: Complexity in enforcement and inter-company ranking.

Tip: Provide corporate structure charts when seeking offers.

How lenders value security and set Loan‑to‑Value (LTV)

Lenders use independent valuations, market comparables and insurance replacements to set LTVs. Expect haircuts: commercial property may attract smaller haircuts than specialised machinery. Valuation timing matters — many lenders require up-to-date surveys (3–6 months) and will revalue assets before drawdown. Specialist lenders or brokers can advise realistic LTV bands for your asset mix.

Which security lenders prefer by loan type

• Commercial mortgage / bridging: commercial property or residential director mortgage for bridging.
• Asset finance: the asset being purchased (new or used equipment, vehicles).
• Invoice finance / debtor facilities: charge over invoices and control over collections.
• Working capital or term loans: debentures (fixed/floating), property or personal guarantees.

Not sure which applies to your situation? Start a quick enquiry and our matching service will connect you to brokers who specialise in your loan type: Get Quote Now.

Consequences & risks of offering security

Granting security increases the lender’s remedies if you default — enforcement, asset sale and personal liability (if guarantees exist). In insolvency, fixed charge holders rank above floating charge holders and unsecured creditors — so priority matters. Always get independent legal advice before creating charges, and understand covenants restricting business activity or asset disposal.

Alternatives to secured borrowing

If you can’t or won’t offer security, options include unsecured business loans, peer-to-peer lenders, merchant cash advance or revenue-based finance. These tend to cost more, offer smaller facilities or require stronger cashflow evidence. A broker can compare secured vs unsecured routes to find the most cost‑effective option for your business.

How UK Business Loans helps

We’re a specialist introducer that matches UK businesses (loans from £10,000+) with lenders and brokers who accept the types of security your business can offer. Complete our short enquiry and we’ll match you with partners who understand your sector and assets. Submitting an enquiry is free, non‑binding and does not count as a formal application — it simply helps us identify the right lenders for you. Free Eligibility Check

What to prepare before you apply

• Company accounts (latest 2–3 years) and management accounts.
• Asset list with photos, purchase dates and valuations (for equipment/vehicles).
• Property title deeds or lease, tenancy schedule and recent commercial valuation if available.
• Debtor ledger and aged receivables (for invoice finance).
• Director details and details of any proposed personal guarantees.

Frequently asked questions

Do all lenders require security?

No — many smaller loans and some unsecured term facilities exist. Larger facilities, property finance and many working-capital products commonly require security.

Can I use my home as security for a business loan?

Some lenders accept residential property as security via a director mortgage, but that creates personal risk. Always discuss implications with a solicitor before proceeding.

What’s the difference between a fixed and floating charge?

A fixed charge secures a specific asset and usually ranks higher in liquidation. A floating charge covers a changing pool of assets and only crystallises into a fixed charge on certain events.

Can lenders repossess assets without notice?

Enforcement depends on agreement terms and jurisdiction. Lenders normally follow legal procedures — but some security types (e.g., hire purchase) allow quicker repossession if you fall into default.

Will offering security get me a lower rate?

Often yes — good security typically expands lender options and can improve pricing, but other credit factors remain crucial.

How quickly can UK Business Loans connect me to lenders?

Complete our quick enquiry and we’ll match you to suitable partners; many businesses receive contact within hours or a few business days depending on complexity.

Final steps & contact

If you’re considering secured borrowing, gather the documents above and start your Free Eligibility Check — it takes only a couple of minutes and helps us match you to the most appropriate lenders and brokers: Get Quote Now.

UK Business Loans is an introducer — we do not lend. Completing an enquiry is a non‑binding information request to help match your business with lenders/brokers. Submitting an enquiry does not affect your credit score.

Content by: [Content by: UK Business Loans], Small Business Finance Specialist — Last updated: 31 October 2025

1. How do I get matched to UK business loan lenders through UK Business Loans?
Complete our free two‑minute eligibility enquiry and we’ll match you to suitable, FCA‑regulated lenders and brokers who typically contact you within hours or a few business days.

2. Do secured business loans require personal guarantees or other security?
Many secured loans require business assets, commercial or residential property, debentures or director personal guarantees depending on the lender and facility type.

3. What types of security do lenders accept for secured business loans in the UK?
Lenders commonly accept commercial property, residential director mortgages, company debentures (fixed/floating), asset and vehicle charges, invoice receivables, bank account charges and third‑party guarantees.

4. Will submitting an enquiry through UK Business Loans affect my credit score?
No — submitting an enquiry is non‑binding and does not affect your credit score; lenders may only carry out credit checks if you choose to progress to a formal application.

5. What Loan‑to‑Value (LTV) can I expect for commercial property or asset finance?
Typical LTVs vary by asset and lender — commercial property often attracts 50–75% LTV while asset finance can reach 60–100% for new equipment and is lower for used items.

6. Can I use my home as security for a business loan?
Some specialist lenders accept residential property via a director mortgage or cross‑collateralisation, but this creates personal risk and should be discussed with a solicitor first.

7. How quickly will I receive a quote or funds after enquiring?
You’ll often receive contact within hours or a few business days, with drawdown times ranging from days for bridging finance to several weeks for commercial mortgages.

8. What paperwork should I prepare before applying for a business loan?
Have recent company accounts (2–3 years), management accounts, an asset list with photos/valuations, property deeds or tenancy schedules and your debtor ledger ready to speed approval.

9. What are the alternatives if I can’t or won’t offer security?
Unsecured business loans, peer‑to‑peer lending, merchant cash advances and revenue‑based finance are alternatives, although they typically cost more or offer smaller facilities.

10. Are the lenders and brokers on UK Business Loans regulated and trustworthy?
Yes — UK Business Loans only connects you with vetted, reputable partners who operate under FCA regulations and follow transparent, fair‑treatment standards.