A debenture is a legal document used in business lending that gives a lender a form of security over a company's assets. It is registered against the company and sets out the lender's rights if the borrowing is not repaid. It is a feature of some secured business finance.
Fixed and floating charges
A debenture often contains one or both of two kinds of charge.
- A fixed charge attaches to specific assets, such as a particular piece of property or equipment.
- A floating charge covers a changing pool of assets, such as stock, that the company uses in the normal course of trading.
Why it matters
A debenture is a significant commitment because it places security over company assets. If a lender proposes one, it is worth understanding exactly what it covers and what would happen if the loan were not repaid. Your accountant or solicitor can explain the implications for your business.
Credicorp lends only to UK limited companies and LLPs for business purposes. We do not take personal guarantees from directors; any security that applies to a facility is set out clearly before you accept. If anything in an agreement is unclear, ask us before you sign.
See also: Glossary: debenture, What is a tariff of charges?, Secured vs unsecured business lending: what's the difference?.