Secured vs Unsecured Refinance: Which Business Refinancing Option Suits Your Company?

Summary: Refinancing can cut costs, improve cashflow or consolidate debt — but choosing secured or unsecured refinance depends on your assets, credit profile, borrowing amount and how quickly you need funds. Secured refinance typically offers lower rates and larger sums but uses business assets (property, plant or equipment) as security. Unsecured re-finance is faster and protects assets, but usually costs more and offers smaller, shorter-term facilities. Read on for quick comparisons, decision checklists, real-world examples and a simple next step: complete a free eligibility check to get matched with lenders and brokers who specialise in business refinance from around £10,000 upward.

Want to reduce monthly repayments, consolidate multiple high-cost facilities or refinance a commercial property? The right route depends on your goals, security available and appetite for risk.

• Lower monthly cost potential — choose secured for longer terms and better rates.
• Protect business assets — choose unsecured if you can afford a higher rate or need speed.
• We match businesses (loans from £10,000+) to specialist lenders and brokers — free, no obligation.

Get a Free Eligibility Check — Get Quote Now

What does “refinance” mean for UK businesses?

Refinancing means replacing one or more existing borrowing facilities with a new facility (or facilities) on different terms. For businesses this often means:

• Consolidating several higher-cost loans into one lower-cost loan.
• Extending term to reduce monthly repayments and improve cashflow.
• Switching lenders to obtain better pricing or more flexible covenants.
• Raising new funds using existing security (or without) to invest in growth, equipment, or sustainability projects.

What is a secured refinance?

Definition: A secured refinance is backed by business assets — typically commercial property, machinery, vehicles, or a fixed and floating charge against company assets. Lenders take security to reduce their risk, which usually lowers interest rates and increases available amounts.

Common secured products

• Commercial mortgage or re-mortgage (secured on commercial property)
• Asset finance and hire purchase (secured on plant, equipment, vehicles)
• Secured business loans with fixed charges or debentures
• Refinance of bridging loans using property or business assets

Pros

• Lower interest rates and potentially lower monthly repayments
• Access to larger sums and longer repayment terms
• Better options for businesses with solid asset bases

Cons

• Assets are at risk of repossession if you default
• Longer paperwork: valuations, legal charges and searches add time and cost
• Lenders may attach covenants limiting future borrowing or asset sales

Must know: Secured refinance can be cost-effective for established businesses with valuable assets, but weigh the reduced interest against the risk of losing security if cashflow problems arise.

What is an unsecured refinance?

Definition: An unsecured refinance provides finance without taking a charge over business assets. Decisions are based on cashflow, trading performance, credit history and sometimes director guarantees.

Typical unsecured options

• Unsecured business loans
• Working capital loans or overdraft restructuring
• Merchant cash advances (MCAs) and some short-term bridge facilities

Pros

• No business assets committed as security
• Faster decision-making and simpler documentation
• Useful for short-term cashflow smoothing or when assets are limited

Cons

• Higher interest rates and fees than secured options
• Lower borrowing limits and shorter terms
• Directors may be asked for personal guarantees

Which option fits your business? Key decision factors

Use the following factors to guide your choice. There’s rarely a one-size-fits-all answer — but the checklist below helps you pick the most suitable route.

Business size and asset base

• If you own commercial property or high-value equipment and need larger amounts (often >£100k), secured refinance usually makes sense.
• If you have limited assets or prefer not to encumber them, consider unsecured options for smaller sums from around £10,000 upward.

Credit history and trading record

• Strong trading history and good credit scores open more secured and unsecured options.
• Poor credit often means secured options (using assets) may still be available where unsecured would not.

Purpose of refinance

• Debt consolidation and long-term restructuring — typically secured to achieve lower monthly costs.
• Urgent working capital or project cashflow — unsecured may be quicker despite higher cost.
• Property-related borrowings (re-mortgage) — secured by definition.

Cost sensitivity — rates vs fees vs term

• Compare headline rate, arrangement fees, valuation/legal costs and early repayment charges. A low rate with high fees may not save money long-term.

Speed and operational disruption

• Need funds inside days? Unsecured or specialist short-term secured refinances (with prepared paperwork) can be faster.
• Complex secured re-mortgages typically take longer (weeks to months).

Future plans

• Planning to sell assets or the business soon? Avoid long-term charges that complicate exits.

Quick checklist — recommended path for common scenarios:

• Construction firm owning plant/property needing larger loan: secured refinance (asset-backed commercial mortgage or asset finance).
• Sustainability/renewables installer needing short-term project funding: unsecured working capital or short-term bridging, then refinance longer-term secured if required.
• Company with multiple high-cost short-term loans: consider secured consolidation for lower repayments if assets available.

Free Eligibility Check — compare secured and unsecured offers from specialist lenders and brokers.

Practical examples / mini case studies

Example A — Construction contractor

A regional contractor had multiple high-cost overdrafts and equipment loans. They owned a small freehold yard and plant. A secured refinance using the property and equipment produced a single long-term facility with a lower rate and reduced monthly repayments — freeing cashflow for growth.

Example B — Renewable installer

A solar installer needed quick working capital to fund materials for a series of projects. They chose an unsecured short-term facility to move fast and avoided putting trade equipment at risk. Later they moved to a longer-term secured facility once cashflows stabilised.

Compare lender offers — No obligation

Costs, covenants and risks to watch

• Interest: secured typically lower; unsecured higher.
• Fees: arrangement, valuation, legal and broker fees — these can erode savings.
• Early repayment charges: check for breakage costs when remortgaging or consolidating.
• Covenants and restrictions: secured deals often include financial covenants — ensure you can meet them.
• Personal guarantees: may still be required on unsecured and some secured deals.

Watch out: Always get full terms in writing and compare total cost of credit (rate + fees) across lenders.

How to prepare before applying

Gather these documents to speed up the process:

• Company accounts (2–3 years where available) and recent management accounts
• Business bank statements (3–6 months)
• Cashflow forecasts and project plans if funding growth or sustainability works
• Details of assets (valuations, age, ownership) if you plan to use security
• Company registration and director ID/contact details

Having clear numbers and forecasts both helps get better offers and speeds lender decisions.

How UK Business Loans helps — our quick match process

UK Business Loans does not lend. We introduce businesses seeking refinance to our network of specialist lenders and brokers. Here’s how it works:

1. Quick enquiry: Complete our short form (takes 2 minutes). This is not a credit application and does not affect your credit score. Get a Free Eligibility Check.
2. Targeted match: We match your business to lenders/brokers who specialise in your sector and the refinance type you need.
3. Compare offers: Receive contact and indicative terms from multiple providers — compare and choose the best fit.

Benefits: save time, increase chances of the right match, no fee to use our service (we earn on completed introductions).

FAQs

Will applying for a refinance via UK Business Loans affect our credit score?

Submitting an enquiry with us does not affect your credit score. Lenders typically carry out credit checks later if you proceed with a formal application.

Which is cheaper: secured or unsecured refinance?

Generally secured refinance is cheaper (lower rate, longer terms) because the lender has security. Unsecured is quicker but typically more expensive.

How long does a secured refinance take compared to unsecured?

Secured refinances (eg commercial mortgages) commonly take several weeks to a few months due to valuations and legal work. Unsecured facilities can often be completed in days to a few weeks.

Can I refinance if I have imperfect credit?

Possibly. Some lenders will consider secured refinance where unsecured would not — especially if you have valuable assets. A specialist broker can help identify suitable options.

Will I need a personal guarantee?

Some lenders require personal guarantees, particularly on unsecured facilities or lending to smaller businesses. Always check the terms before proceeding.

Do you charge for the introduction or quote?

No — our service is free for businesses. We are paid by lenders and brokers when you complete a transaction, so there’s no cost to start.

Next steps & final note

If you’re weighing secured vs unsecured refinance, the fastest way to see which route is realistic for your company is to get tailored, no-obligation quotes. Complete our short enquiry and we’ll match you to lenders and brokers who specialise in the loan size and sector you operate in.

Start Your Enquiry — Free Eligibility Check

Important: UK Business Loans is an introducer. We do not lend or provide regulated financial advice. Submitting an enquiry is not a credit application and will not automatically trigger a credit search. We introduce you to lenders and brokers who can provide terms — any offer and decision rests with those providers.

For more detail on product options and to compare refinance routes, see our guide to refinance loans.

1. What is business refinance and how can it help my UK company?
Refinance replaces one or more existing borrowing facilities to lower costs, extend terms, consolidate debt or raise new funds for growth or cashflow.

2. What’s the difference between secured refinance and unsecured refinance?
Secured refinance is backed by business assets (eg commercial property, plant) and usually offers lower rates and larger sums, while unsecured refinance protects assets and is faster but typically more expensive with smaller limits.

3. Which refinance option is cheaper for a business: secured or unsecured?
Secured refinance is generally cheaper due to lower interest rates and longer terms, though you should compare total costs including fees, valuations and legal charges.

4. How much can I borrow when refinancing a business in the UK?
Amounts depend on your asset base, credit profile and lender appetite — unsecured facilities often start from around £10,000 while secured refinancing can support much larger loans (often £100k+ up to multi‑million).

5. How long does a secured or unsecured refinance typically take?
Unsecured refinances can complete in days to a few weeks, whereas secured options like commercial remortgages commonly take several weeks to a few months because of valuations and legal work.

6. Can I refinance my business if I have imperfect or bad credit?
Possibly — lenders are more likely to consider secured refinance using assets when credit is imperfect, and specialist brokers can help identify appropriate options.

7. Will submitting an enquiry with UK Business Loans affect our business credit score?
No — completing a free eligibility enquiry with UK Business Loans is not a formal credit application and will not affect your credit score.

8. What documents should I prepare before applying for a refinance?
Prepare company accounts (2–3 years if available), recent management accounts, 3–6 months of business bank statements, cashflow forecasts, asset details/valuations and director/company registration information.

9. Will I need to provide a personal guarantee or put up business assets as security?
Some lenders may require personal guarantees and secured deals will use business assets as collateral, so always check the lender’s terms before proceeding.

10. Does UK Business Loans charge to match me with lenders and brokers for refinance loans?
No — UK Business Loans is a free introducer service that connects you to regulated lenders and brokers and only receives payment from partners when a transaction completes.