Sustainability Loans: What Security & Guarantees Are Required for Larger Loans?

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If you’re planning a larger sustainability project (solar farms, EV charging hubs, battery storage, retrofit portfolios) and searching for clarity on what lenders will ask for, this page explains the common forms of security and guarantees you’re likely to meet, why they’re required, practical costs and consequences, and how to proceed. Ready to compare options? Get Quote Now — Free Eligibility Check.

Quick summary — what to expect

• For larger sustainability loans (typically six-figure and above), lenders usually require some form of security or guarantees.
• Common security: fixed/floating charges, mortgages on real estate, asset charges over panels/batteries/chargers, assignment of revenue (PPAs/offtake), account charges and escrow arrangements.
• Guarantees may include parent company guarantees, EPC/O&M contractor completion guarantees, performance bonds and insurance policies.
• Security is registered (Companies House, HM Land Registry) and may be held by a security trustee in multi-lender deals.
• If you want tailored options, Get Quote Now — Free Eligibility Check to be matched with specialist lenders or brokers.

Why lenders ask for security on larger green projects

Lenders take security to reduce risk and improve recoverability if a project underperforms or defaults. Large sustainability projects involve specific risks: construction/completion risk, performance technology risk, revenue uncertainty (market prices, PPAs, subsidy changes) and operational risk (O&M, degradation).

Smaller corporate sustainability loans or sustainability-linked facilities may be unsecured or lightly secured. By contrast, project-style or development finance for larger schemes is often asset-backed or requires guarantees because the loan size, term and cashflow profile make lender loss severe if things go wrong.

Common types of security and collateral

Fixed and floating charges

Fixed charges attach to specific assets (identified equipment, land, buildings) and give the lender priority over those items. Floating charges cover a company’s circulating assets (stock, receivables) and can crystallise into a fixed charge on default. Both are registered at Companies House — earlier charges take priority, so timely registration and clear subordination terms matter.

Mortgages & legal charges on property

When a project uses real estate (roof-mounted solar, charging hubs, battery storage sites), lenders typically take a legal charge registered at HM Land Registry. Mortgages provide strong security but involve searches, valuations and sometimes restrictions on use or subletting.

Security over project assets (solar, batteries, EV chargers)

Lenders will often take a charge over physical project assets: PV arrays, inverters, battery packs, chargers and related plant & equipment. This can be a fixed charge or secured by retention of title clauses with suppliers. Identification (serial numbers, asset tagging), maintenance covenants and third‑party title searches are standard.

Assignment of income, PPAs and offtake security

For revenue-backed projects, lenders commonly require an assignment of income: PPA receipts, offtake payments, subsidies or sale of green certificates. Assignment may be conditional on offtaker consent or notice, and lenders often require direct payment mechanisms (payment to an escrow or controlled account) to ensure cashflow security.

For more background on common sustainability finance structures see our guide to sustainability loans.

Share pledges & parent company guarantees

If the project is held in a special purpose vehicle (SPV) with limited assets, lenders frequently ask for a share pledge or a parent company guarantee to add credit support. Share pledges let lenders seize ownership of the SPV in enforcement; parent guarantees may provide direct recourse to stronger balance sheets.

Performance bonds, completion guarantees & insurance

During construction and commissioning, lenders require completion guarantees and performance bonds (often provided by EPC contractors or insurers) to cover delays, defects or cost overruns. Lenders also expect adequate insurance for construction, operational and third-party risks.

Charge over bank accounts, cash sweeps & escrow

Control of project bank accounts is common: lenders may require account charges, cash sweep mechanisms (diverting excess cash to debt service), or escrow arrangements for key receipts (e.g., PPA income). These reduce diversion risk and ensure debt servicing priority.

Intercreditor agreements, trustees & SPV structures

For syndicated or multi-party lending, a security trustee holds the charges for the lenders and an intercreditor agreement governs priorities and enforcement rights. SPV structures isolate project assets and revenue, simplifying security packages and clarifying recovery routes.

Typical guarantees — when lenders will ask and why

• Parent company guarantees: common when SPV sponsors have stronger credit; provide corporate recourse beyond the project.
• Director or personal guarantees: more common on smaller deals or where sponsors lack corporate backstops; less typical for large institutional project finance.
• EPC/O&M guarantees: contractors often provide completion guarantees, performance warranties and maintenance obligations.
• Offtaker guarantees: large corporate or public offtakers may guarantee payment obligations to support project finance.
• Step-in rights: lenders may require contractual step-in rights to appoint new operators or contractors if the project fails to meet performance targets.

How security is created, registered and perfected

Security is created by executing security documents (charges, pledges, assignments) and perfected by registration and possession where required. Typical steps:

1. Draft and agree security documentation and intercreditor terms.
2. Register charges at Companies House and legal charges at HM Land Registry.
3. Notify and obtain consents from third parties (offtakers, landlords, equipment suppliers).
4. Physical tagging, serialising and insurer/engineer inspections to value assets.

Allow for solicitor fees, registration fees, valuation and technical due diligence costs — perfection can take days for simple registrations, weeks for complex titles or cross-jurisdictional issues.

Practical implications: costs, priority, restrictions & covenant examples

Granting security has immediate and ongoing implications:

• Costs: legal fees, valuation, registration, searches, insurance and monitoring fees. Expect these to be several thousand pounds on mid-sized deals and higher on large projects.
• Priority: earlier-registered creditors usually have priority. Subordination or release mechanics must be agreed if you refinance or raise further debt.
• Common covenants: no further charges without consent, maintenance and insurance covenants, environmental warranties, financial covenants (DSCR, minimum liquidity), and reporting obligations.
• Default consequences: enforcement, receivership, sale of assets and termination of PPAs or licences — lenders may appoint a receiver or exercise step-in rights.

Important: giving security can limit future lending flexibility and expose assets to enforcement on default. Seek legal and financial advice before committing.

How lenders evaluate security and project risk

Lenders combine credit analysis with technical due diligence. Key assessments include:

• Borrower creditworthiness and sponsor strength
• Revenue certainty: PPA pricing, offtaker credit, subsidy stability
• Technology & construction risk: track record of suppliers/EPCs, degradation rates
• Legal title and environmental issues
• Independent engineer reports, insurance terms and a realistic operating model (DSCR stress tests)

How UK Business Loans helps you

We help businesses seeking sustainability finance by matching your project with lenders and brokers who specialise in green and asset-backed finance. Our service is free to use and designed to save time — submit a short enquiry and we’ll introduce you to partners suited to loans of £10,000 and up. Get Quote Now — Free Eligibility Check

UK Business Loans is an introducer and not a lender. We do not provide financial advice. We will share your details with selected, vetted lenders and brokers who may contact you. Our service is free and your initial enquiry will not affect your credit score. All finance is subject to lender terms. You should seek independent legal and financial advice before granting security.

Frequently asked questions

Do all sustainability loans require security?

No. Small corporate sustainability loans or sustainability-linked facilities can be unsecured. However, for larger project or development finance (often six-figure and above) lenders commonly require security over assets, property or revenue.

Are personal guarantees common on large sustainability projects?

Personal guarantees are less common for institutional project finance. Lenders prefer corporate/parent guarantees, asset security and performance bonds for larger deals.

How long does registration and perfection usually take?

Simple Companies House registrations take a few days; Land Registry charges and complex title matters can take several weeks. Allow extra time for technical due diligence and third-party consents.

Can I refinance later to release security?

Yes — refinancing or partial release is possible but depends on priority ranking and consent from existing creditors. Lenders often agree release mechanics in advance, subject to replacement security or repayment.

What happens to subsidies, grants or green certificates?

These can be assigned as revenue security if contractually permitted. Lenders will check the legal ability to assign payments or certificates and may require direct payment arrangements.

Will granting security impact day-to-day business operations?

Not necessarily, but covenants may restrict additional borrowing, disposal of assets or changes to business structure. Carefully review covenant language to understand operational effects.

Ready to compare lenders? Get a free eligibility check

For larger sustainability projects, understanding security and guarantee requirements early can save time and reduce cost. Complete a short enquiry and we’ll match you with lenders or brokers experienced in sustainability finance. Start Your Enquiry — Free Eligibility Check. No obligation, no fee.

1) Do sustainability loans always require security?
No — small corporate sustainability or sustainability‑linked loans can be unsecured, but larger project or development finance (typically six‑figure and above) usually requires asset, property or revenue security.

2) What types of collateral do lenders typically ask for on large green projects?
Common collateral includes fixed and floating charges, mortgages/legal charges on property, asset charges over PV panels, batteries and chargers, assignment of PPAs/offtake revenue, share pledges or parent guarantees, and account charges/escrow arrangements.

3) Are personal guarantees usually required for sustainability project finance?
Personal guarantees are uncommon in institutional project finance where lenders prefer corporate or parent guarantees, performance bonds and asset‑backed security, though they may appear on smaller deals.

4) How long does registering and perfecting security usually take?
Companies House registrations can take a few days, while Land Registry charges, third‑party consents and complex perfection steps often take several weeks.

5) Will granting security affect my day‑to‑day business operations?
Possibly — security often brings covenants that can restrict further borrowing, asset disposals or changes to business structure and adds ongoing reporting, maintenance and insurance obligations.

6) Can I refinance later to release or replace security?
Yes — refinancing or partial release is possible but depends on priority, subordination and lender consent, and is usually subject to agreed release mechanics or replacement security.

7) What costs should I expect when providing security for a sustainability loan?
Budget for solicitor fees, registration and valuation costs, technical due diligence, insurance and monitoring fees, which can be several thousand pounds on mid‑sized deals and higher for large projects.

8) What do lenders focus on when assessing security and project risk?
Lenders assess sponsor creditworthiness, revenue certainty (PPAs/offtakers/subsidies), construction and technology risk, legal title and environmental issues, independent engineer reports and DSCR stress testing.

9) How does UK Business Loans help me find a sustainability loan?
UK Business Loans is a free introducer (not a lender) that uses your enquiry information to match you with vetted, FCA‑regulated lenders and brokers specialising in sustainability and asset‑backed finance.

10) Will submitting an enquiry with UK Business Loans affect my credit score?
No — completing the short enquiry is free and won’t impact your credit score; partner lenders may only run credit checks if you choose to proceed.