Secured Business Loans FAQ
What is a Secured Business loan?
To begin with a secured Business loan is a term used to describe a loan which is secured against an Asset. This provides a further level of security to the lender. The asset which can be used to secure a loan can be property, equipment, machinery, vehicles, invoices etc.
With a secured loan a lender will be entitled to apply a charge against the specific assets. In the event of default the lender can then look to repossess the assets for onward sale. Any assets sold will help clear the balance owed to the lender.
What are the differences between a Business and Personal secured loan?
Both types of loan are very similar. A lender will place a charge against a specific asset which is provided to secure the loan – such as a mortgage.
In reality there are far more flexible options with a secured Business loan as typically there are more assets within a business which can be offered as security.
Will my Business be approved for a Secured business loan?
This is a very difficult question to answer as all lenders will have their own underwriting criteria.
Generally lenders are more open to providing secured Business funding over unsecured funding. This is because there is an asset to sell in the event of default.
Primarily there needs to be some equity in the asset being provided as security. If there is no equity in the asset then a lender can not realise this in the event of default and therefore the asset is worthless to a lender.
What are the benefits of a Secured Business loan?
Secured Business loans provide a lender with a lower level of funding risk. A secured loan is more likely to be approved over an unsecured loan as the lender can sell the asset provided as security if needed.
A Business which has no credit history is unlikely to obtain an unsecured loan, however, if they have an asset to use as security then a secured loan may be provided.
A further benefit of using a Secured Business loan is that the interest rates are usually far lower than an unsecured loan. A secured loan provides a far lesser risk to the lender and so this is reflective in the rates provided.
What happens if I miss a repayment on my secured business loan?
The key point with any loan is not to miss any payments, however, we know this sometimes can be unavoidable.
Generally a lender will look to sell any asset offered as security should a lender fall into default.
Furthermore we would recommend speaking to your lender if there is a possibility of missing any payments.
Are there any alternatives to a Secured Business loan?
There are a number of alternatives available if you are not willing to use Business assets to secure the loan.
Invoice Factoring / Invoice Discounting – this is similar to a Business Loan, however, you use the Businesses debtor book to secure any funding provided by a lender. This is a more popular solution on the market with over 40,000 users currently in the UK.
Merchant Cash Advance – If you take card payments you could obtain a loan against future card takings with a small amount being repaid every time a payment is received.
Flexi Drafts – This is just an overdraft which is provided by the independent lenders. Although not directly a secured option most providers of FlexiDrafts require the Business owner to be a homeowner.
We can help you find a Secured Business loan provider
All Star Funding Solutions has a panel of over 200 Business Loan providers in the UK. We can help your business switch to a new provider.
- Provide funding from £5,000 upwards
- Provide fast decisions, typically within 48 hours.
- Replace the current finance provider and support the business going forward.
- Provide finance for all kinds of situations with a totally flexible repayment profile (Typical maximum is 60 months)
- Take security over any asset, either as a single asset, or combination (Property, Machinery, Vehicles, Plant, Receivables and Inventory)
How to apply for a Secured Business Loan?
Applying for a Business Loan is very simple. Click the link below or call 0161 8211478 to speak with one of our specialists.
Finally as members of the Financial Intermediary and Broker Association you can be assured of a great service. https://www.fiba.org.uk/
Finance approval is subject to status and terms and conditions apply.