Security for Larger Green Capex: What UK Lenders Will Take

Summary: If you’re funding larger green capital expenditure — rooftop solar, battery storage, EV fleets, heat pumps or major retrofit works — UK lenders commonly ask for security. Typical forms include property mortgages or legal charges, fixed charges on named equipment, hire purchase/finance leases, debentures (fixed and floating charges), account/ income assignments, and director guarantees or share pledges where corporate assets are thin. Which combination a lender wants depends on project size (security often appears above c.£10k–£50k), asset permanence (fixture vs chattel), lender type and risk profile. To see what lenders will ask for your project, get a Free Eligibility Check: Get Quote Now.

At a glance: Typical security types

• Property mortgage / legal charge (registered at Land Registry)
• Fixed charge on named equipment (serial numbers, installation)
• Floating charge / debenture for broader corporate borrowing
• Hire purchase / finance lease (title retained until paid)
• Director guarantees, share pledges or third‑party guarantees
• Account charges, assignment of grant/PPA income

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Why lenders require security for larger green capex

Lenders assess risk. Large green capex projects often involve specialist equipment, specialist installers and capital sums that can materially affect a borrower’s balance sheet. Security mitigates lender risk from non‑payment, asset obsolescence, removal or loss in value. Lenders also consider operational risks (performance shortfalls for generation or efficiency savings), warranty and maintenance records, and the ease of repossessing and re‑selling assets.

Different lender types (high‑street banks, challenger banks, asset financiers, specialist green funds) have different appetites. As a rule of thumb, lenders are more likely to seek formal registered security for projects over c.£50k–£100k, but asset finance firms commonly take asset security even for smaller sums. Projects from about £10k upwards can be financed — but security requirements depend on borrower strength and asset type.

Forms of security lenders commonly take

Mortgages & legal charges over property

For rooftop solar, large building retrofits or ground‑mounted systems where panels and ancillaries are fixed to the land or building, lenders often take a legal charge (first or second charge) registered at the Land Registry. A mortgage gives priority over other unsecured creditors and can be enforced on default. For leasehold premises, lenders usually require landlord consent; for freeholds they will check covenants and planning restrictions.

Fixed charges over specific assets

A fixed charge is taken over named equipment (identified by make/serial, location). It prevents the borrower removing or disposing of the asset without lender consent and gives the lender priority over that asset. Fixed charges are common for high‑value plant: commercial battery banks, large heat pumps, commercial boilers and similar.

Floating charges & debentures

Where a company needs a facility against a broad range of assets — stock, receivables, equipment — a lender will use a debenture that typically includes a mix of fixed charges on specific items and a floating charge over circulating assets. The floating charge crystallises into a fixed charge on default. This structure is common for larger corporate loans and working capital packages linked to project finance.

Hire purchase (HP) & conditional sale

With HP or conditional sale agreements, legal title remains with the funder until all payments are made. The borrower uses the asset but cannot sell it. This is a standard route for vehicles, EV fleets and mobile plant. Terms usually include registration of the funder’s interest and detailed repayment schedules.

Finance leases

Finance leases are economically similar to HP: the lessee records the asset and most risks/rewards but title stays with lessor. Lenders or lessors rely on their contract and often register charges; this is used where lessors specialise in particular technologies and can manage obsolescence risk.

Chattel mortgages & security assignments

For movable equipment (chattels), lenders can take a chattel mortgage or an assignment of the purchase contract. Where registration is possible, they’ll register notices (e.g. at Companies House for company charges) so priority is clear.

Retention of title & supplier security

Supplier retention of title (RoT) clauses keep goods owned by the supplier until paid. Lenders view RoT favourably where the original supplier remains solvent and cooperative — especially if vendor finance is part of the package. RoT may complicate a lender’s later enforcement so transparency is essential.

Director guarantees & shareholder pledges

Where corporate assets are limited, lenders commonly ask for personal guarantees from directors or share pledges. Guarantees create personal liability and are used to bridge gaps in security coverage. Expect lenders to seek legal advice and to set clear terms for enforcement and limitation.

Charges over bank accounts, income assignment & cash sweeps

Lenders frequently take a debenture that includes a charge over business bank accounts or require a cash‑sweep arrangement. For generation or energy projects, lenders may require assignment of PPA (power purchase agreement) receipts or grant payments — subject to the third party’s consent and grant rules.

Special considerations for green assets

Green assets bring specific issues lenders will test and protect against:

• Fixture vs chattel: Solar panels, EV chargers and piping may be fixtures (part of land) or chattels. Fixtures can be secured via a property charge; chattels require an asset finance route. The legal test (annexation, intention) matters — lenders will instruct surveyors.
• Obsolescence & performance: Rapid tech change (batteries, inverters) means lenders may shorten amortisation schedules, demand strong warranties, or require maintenance/O&M contracts and performance guarantees.
• Grants and PPAs: Grants and subsidies can be valuable collateral; lenders may ask to assign these receipts. Note some grants restrict assignment — always check grant terms and notify the funder.
• Landlord & planning consents: Leasehold projects need landlord consent; installations over roofs or common parts often require easements and permission for access for maintenance and lender inspections.
• Environmental and safety checks: Batteries bring specialist environmental and decommissioning liabilities. Lenders typically require evidence of compliance, insurance and decommissioning plans.
• Insurance: Comprehensive cover listing the lender as loss payee is normally required.

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What lenders look for in due diligence

Expect lenders to request an asset register (serial numbers, photos), independent valuations, installer/ supplier contracts, performance forecasts (generation or savings), warranty & O&M contracts, planning/ landlord consents, EPCs where relevant, proof of grant eligibility and accounts/credit checks. Preparing clear documentation speeds the process and improves offers.

Negotiation & structuring tips for borrowers

• Reduce security pressure with a higher deposit, shorter term, or vendor finance to lower the funded amount.
• Ask for staged security tied to installation milestones so charges only crystallise when assets are operational.
• Use specialist brokers — they can match you to lenders that accept alternative security mixes or limited‑recourse structures for proven projects.
• Plan to refinance after a 6–12 month performance proving period; lenders may relax security after the asset proves reliable.

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Typical outcomes & examples

• Rooftop solar (£150k): usually a first or second legal charge on property plus a fixed charge on the PV system and assignment of export/PPA receipts.
• EV fleet (£300k): often financed via hire purchase or finance lease; funder retains title until final payment; director guarantees may be requested for small companies.
• Battery installation on leased premises: fixed charge on the batteries, landlord consent and O&M contract; possible assignment of merchant/ PPA income.

Frequently asked questions

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Author & compliance note

Content by: Alex Turner — Business Finance Specialist, UK Business Loans. Over 10 years’ experience matching UK SMEs to asset finance and sustainability lenders.

How we work: UK Business Loans introduces enquiries to selected lenders and brokers to help you get quotes. We are an introducer, not a lender, and we do not give regulated financial advice. Completing an enquiry is not a loan application; it provides information to help match you to the most appropriate providers.

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Learn more about tailored sustainability funding options on our sustainability resource page: sustainability business loans.

External references: Land Registry guidance on registering charges, Companies House guidance on registering company charges, and gov.uk pages on energy grants and business subsidies (check specific grant terms before assuming assignability).

1. What types of security do UK lenders typically take for larger green capex projects?
Lenders commonly take property mortgages/legal charges, fixed charges on named equipment, debentures (fixed and floating), hire‑purchase/finance leases, account charges or income assignments, and director or shareholder guarantees depending on the deal.

2. At what project size will lenders usually insist on registered security for green projects?
As a rule of thumb, registered security often appears for projects from around £50k–£100k, though asset finance providers may take asset security on projects from c.£10k upwards.

3. Can I finance rooftop solar or battery storage without putting a charge on my property?
Sometimes — smaller or modular systems can be asset‑financed, hire‑purchased or subject to fixed equipment charges, but larger rooftop or retrofit projects commonly involve a property charge.

4. What is the practical difference between a fixed charge and a floating charge for project finance?
A fixed charge attaches to specific named assets (preventing disposal without consent) while a floating charge covers changing assets like stock or receivables and only crystallises into a fixed charge on default.

5. Will lenders ask directors for personal guarantees on sustainability loans?
Yes — where corporate assets are limited lenders often request director guarantees or shareholder pledges to strengthen the security package, though requirements vary by lender and deal size.

6. Can I get green capex finance for leasehold premises and what will lenders require?
Yes — but lenders will usually require landlord consent, review lease covenants and secure access or easements for maintenance and potential enforcement.

7. Are grants, subsidies or PPA receipts acceptable as security for green finance?
They can be acceptable subject to the grant or PPA terms and any required third‑party consents, and lenders will always review assignability before accepting them as collateral.

8. How long does it take to get an initial finance quote and will an enquiry affect my credit score?
You can typically receive responses within hours on business days and submitting an initial enquiry through UK Business Loans does not affect your credit score.

9. What documents do lenders commonly request during due diligence for green capex?
Expect to provide an asset register with serial numbers/photos, independent valuations, installer contracts, warranties and O&M agreements, performance forecasts, planning/landlord consents and company accounts.

10. Can I renegotiate or refinance to reduce security after my green asset proves performance?
Yes — borrowers commonly refinance or renegotiate terms after a 6–12 month performance‑proving period to seek lighter security, subject to lender consent and prevailing market terms.