What Is a Secured Business Loan?
You get a lower rate on a secured loan because you back it with an asset. If you default, the lender can sell that asset to clear the debt, so it prices in less risk and passes you the saving.
You’ll feel that saving on your APR in 2026: secured runs 6 to 10%, against 8 to 15% for an unsecured high-street loan and 15 to 50% or more from alternative lenders.
It suits you for bigger, longer borrowing. We’d reach for secured finance on sums above £50,000 over several years, where the rate gap outweighs the cost and hassle of pledging an asset.
What Can Be Used as Collateral?
You can secure a loan against several assets, and the stronger the asset, the more you borrow. Commercial property, often your own premises, is the strongest, then machinery, vehicles, stock, and your invoices through a debenture.
You can also pledge your home through a second charge. That lets you borrow against personal equity without touching your existing mortgage, but it puts the house on the line.
You’ll pay for a valuation up front. A RICS surveyor values property under the Red Book, and you foot the bill, from £500 to a few thousand depending on the property.
Picture your accountant chasing you for the title deeds at month-end, with the survey fee already paid. That’s money you lose even if the deal falls through.
Rates and Terms for Secured Business Loans
You’ll pay 6 to 10% APR on a secured loan in 2026, with the Bank of England base rate at 3.75% setting the floor. High-street banks sit at the low end; specialist lenders charge more but take on trickier cases.
Your term follows the asset. A commercial mortgage can run 25 to 30 years, while equipment finance usually runs 1 to 7 years, matching the kit’s working life.
Watch the fees on top of your APR. Arrangement fees run 1 to 2% of the loan, and a fixed-rate deal usually carries an early repayment charge of 1 to 5%, tapering over the fixed period.
That’s tens of thousands you save on a big, long loan.
Eligibility Requirements
You’ll clear a higher bar with a bank than a specialist. High-street lenders want two years’ trading, a clean record on your credit file, and a director’s personal score in the good bands.
Your asset sets the ceiling through loan-to-value. Property runs 70 to 80%, machinery 50 to 70%, and stock 30 to 50%, so a £500,000 property at 75% backs a £375,000 loan.
You’ll find a specialist flexes on credit and trading time, but charges more and lends less against the asset. Most lenders also want a personal guarantee on top, so the company’s failure still reaches you.
Risks of Secured Business Loans
You can lose the asset if the business can’t pay. The lender appoints a receiver to sell it, and if that asset is your premises or your home, you lose the roof too.
Picture a rate rise landing at quarter-end while you’re still waiting on a slow customer: miss enough and the charge crystallises, and the receiver moves in.
Watch your loan-to-value, too. If property values fall, your loan can breach the lender’s covenant, and they can demand part of it back or call the whole loan in.
We’d only pledge an asset you could bear to lose. If a bad year would cost you both the business and your home, weigh that hard before you sign.
Secured vs Unsecured: Which Should You Choose?
You’ll usually choose secured when you need £100,000 or more, hold a property or high-value asset, and have a couple of years of clean trading behind you. Over a long term, the rate saving dwarfs the valuation and arrangement costs.
Go unsecured when you need less, want to keep your assets clear, or your business is young or your credit patchy. You’ll pay more, but you keep the asset and your application moves faster.
Run your numbers, don’t default to habit. Picture an owner chasing a 30% unsecured loan when a 7% secured one sat right there, and the five-year gap buys a van.
That’s a five-figure mistake you don’t have to make.
Secured Business Loan FAQs
Can I use my home as security for a business loan?
Yes, usually through a second charge behind your existing mortgage, but it is a high-risk option. If your business defaults, the lender can pursue your home, so most advisers suggest separating personal and business assets where you can. Some lenders take it only as secondary security alongside a business asset, which reduces the risk to the house.
How long does it take to get a secured business loan?
Longer than unsecured lending, typically 4 to 8 weeks from application to funding. The main delay is the asset valuation, which a RICS surveyor must complete, plus the legal work to check title and register the charge. Unsecured loans from specialist lenders can fund within 24 to 48 hours, which is the trade-off for the lower secured rate.
What happens if I default on a secured business loan?
The lender can appoint a receiver to sell the asset used as security, and the proceeds repay the outstanding balance plus costs. If the sale does not cover the debt, you can still owe the shortfall. Where you also gave a personal guarantee, the lender can then pursue your personal assets for whatever is left.
Do secured loans require a personal guarantee as well?
Often, yes. Many lenders want both a charge over the asset and a personal guarantee from the directors. The asset is the primary security and the guarantee is the fallback if the sale falls short. Some specialist lenders accept asset-only security, but that usually means a lower loan-to-value and a higher rate.
Can I get a secured business loan with bad credit?
Often yes, because the asset reduces the lender’s risk, which is the main advantage of secured lending over unsecured. Expect a specialist lender rather than a high-street bank, a lower loan-to-value, and a higher rate to reflect the credit risk. A clean, valuable asset with clear title does a lot of the work that a strong credit file would otherwise do.
How we researched secured business loans
What we covered. This guide explains how secured business loans work for UK firms in 2026: rates, loan-to-value, fees, security mechanics and the risks. We do not rely on comparison-site summaries or aggregator data.
Data sources. Rates, LTVs, fees and ERCs were checked against lender and commercial-finance sources in June 2026, including Allica Bank, the Bank of England base rate, and RICS valuation standards.
How we handle gaps. Where a figure dates quickly, such as the rate range, we verify it against current commercial-mortgage pricing and the prevailing base rate rather than carry an older number forward.
Update cadence. We re-verify this page at least monthly, and whenever a lender changes pricing or terms. The verification date reflects the most recent full review. Some links on this page are affiliate links, see our editorial policy.
Regulatory note. This page is editorial content, not regulated financial advice. Credit products are subject to status and approval, and most business lending sits outside the FCA consumer-credit perimeter. Compare offers directly with providers before you apply.