{"id":482048,"date":"2023-03-17T13:25:03","date_gmt":"2023-03-17T13:25:03","guid":{"rendered":"https:\/\/www.finder.com\/uk\/?p=482048"},"modified":"2026-02-10T14:57:52","modified_gmt":"2026-02-10T14:57:52","slug":"secured-business-loans","status":"publish","type":"post","link":"https:\/\/www.finder.com\/uk\/secured-loans\/secured-business-loans","title":{"rendered":"Compare secured business loans"},"content":{"rendered":"

<\/h3>

What is a secured loan?<\/h3>

A secured business loan is a type of financing that requires you to use business assets as security. Assets used often include commercial property, vehicles, land or machinery. <\/p>

Using an asset as security reduces the risk for the lender as it\u2019s less likely to lose money. Because of this effective guarantee, you can often borrow a larger sum of money over a longer period of time – known as the \u2018term\u2019. You’re also likely to get a better interest rate compared to an unsecured business loan.<\/a> <\/p>

However, it also means that if you are unable to keep up with your repayments, the lender has the right to claim ownership of the assets and sell them to recoup its money.<\/p>

How do secured loans work?<\/h3>

Secured loans work in a similar way to most other types of loan.<\/a> You typically borrow a lump sum of cash that you then repay in monthly instalments over a set term, with interest added on top. Secured loans can have either a variable rate of interest or a fixed rate.<\/p>

Variable rates mean that your interest rate can move up or down in line with movements in the Bank of England base rate. Fixed rates, on the other hand, stay the same for the duration of the loan. Fixed repayments can make it easier to budget. <\/p>

The amount you can borrow through a secured loan will depend on the value of the assets you\u2019re using as security as well as your business finances.<\/p>

Types of secured business loans<\/h3>

As well as standard secured business loans, there are other types of secured lending. These include:<\/p>

Asset finance<\/h4>

This enables you to secure the use of assets such as equipment, machinery and vehicles, without paying for them upfront. The two most common forms of asset finance are hire purchase and lease financing. <\/p>

Hire purchase lets you lease the item over a set term in return for fixed payments and a deposit. At the end of the term, you own the item outright. With lease financing, the lender buys the item and then you rent it back for a fixed monthly fee. At the end of the term, you might be able to continue renting, buy the item for an agreed price, or return it. <\/p>

Asset finance<\/a><\/p>

Revenue based loans<\/h4>

With revenue based financing, you receive a lump sum in exchange for a percentage of your future revenue. You usually repay the loan in monthly instalments, but the amount you pay each month will be linked to how well your business is doing. You pay more in months where business is booming, and less during months when sales have tailed off. <\/p>

Revenue based financing<\/a><\/p>

Invoice financing<\/h4>

Invoice financing is a way of borrowing money based on what customers owe you. Instead of waiting for invoices to be paid, a third party advances you a large percentage of the invoice value upfront, often up to 95%. <\/p>

The invoices act as collateral and when they are due, the third party collects the money from the customer and then pays you the remaining balance minus fees and charges.<\/p>

Invoice financing<\/a><\/p>

Peer to peer lending<\/h4>

Peer-to-peer lending cuts out the middleman (i.e. the bank) and enables you to get a loan from other individuals or businesses. The idea is that it matches people who want to borrow money with those who want to lend it. Interest rates tend to be more competitive for borrowers, while lenders also get better rates than they would with a traditional savings account. <\/p>

Although many peer-to-peer lending platforms offer unsecured loans, some also offer secured loans, whereby you\u2019ll be asked to use an asset as security.<\/p>

Peer-to-peer lending<\/a><\/p>

Who offers secured loans?<\/h3>

Some high street banks will offer secured business loans, but you\u2019re likely to have better luck with a specialist lender, many of which can be found online. <\/p>

Make sure you shop around and compare lenders carefully to check you\u2019re getting the best deal for your business.<\/p>

How to compare secured business loans<\/h3>

When comparing secured business loans, it\u2019s a good idea to keep the following points in mind:<\/p>