Secured lending is any loan or credit facility where the lender holds a legal charge over one or more assets as collateral. If the borrower defaults, the lender can enforce the charge — typically through a receiver or administrator — and recover outstanding amounts from the sale of those assets. The security reduces the lender's risk, which often (though not always) translates into lower rates or higher advance amounts compared with unsecured lending.
Types of security used in business lending
- Fixed charge: attached to a specific identified asset such as commercial property, plant, or vehicles. The company cannot dispose of that asset without the lender's consent.
- Floating charge: covers a pool of changing assets — stock, debtors, cash — and crystallises into a fixed charge on a default event.
- Debenture: a document that typically combines both a fixed and a floating charge across the company's assets, registered at Companies House.
- Legal mortgage: used where the security is a specific property; gives the lender stronger rights than a charge alone.
Secured versus unsecured lending
Unsecured lending involves no asset charge. The lender relies solely on the company's ability to repay from trading cash flow. Because unsecured lenders rank behind secured creditors in an insolvency, they carry more risk. Credicorp assesses each application on the financial strength of the business and structures facilities accordingly. The specific security arrangements — if any — are set out in the facility agreement for each product.
We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.
See also: What is a debenture in business lending?, What is a financial covenant in a business loan?.