Secured business loans

• Asset at risk: if you default, the lender can repossess the secured asset

• Slower process: asset valuation can delay approval

• Legal implications: personal guarantees or charges over property may apply

• Less flexible: you can’t sell the asset while it’s being used as collateral without permission

• Eligibility varies: not all businesses will qualify depending on credit score, trading history, and asset type

To improve your chances of approval, lenders will review:

• type and value of the asset

• business trading history (typically 12–36 months)

• business or personal credit score

• loan-to-value (LTV) ratio

• purpose of the loan

Assets with clear ownership, strong resale value, or low existing debt against them are typically favoured.

• Identify suitable assets to offer as collateral

• Gather documentation: asset valuations, business accounts, proof of ownership

• Compare lenders or use a broker like Funding Options by Tide

• Submit an application and wait for the lender’s underwriting process

• Agree terms and receive funds upon final approval

An unsecured business loan doesn't require you to offer business assets as security. However, the lender still needs to feel confident that you can repay in order to lend to your business, so they will look closely at its credit rating and trading history.

Unsecured business loans could suit businesses that don’t own assets, would prefer not to offer an asset as security, or those who need finance quickly.

Unlike a secured business loan – which is largely informed by the value of the asset offered as security – the amount you can borrow through an unsecured option will typically be a multiple of your annual business turnover.

Unsecured finance tends to be quicker to arrange because you don’t need to go through the asset valuation process. You’ll probably get the funds quicker but interest rates are usually higher.

By offering business assets as security, you’re reducing the level of risk from the point of view of the lender. In this sense, unsecured finance is seen as riskier which is why interest rates can be higher. With secured finance, you’re more likely to be able to borrow a larger amount over a longer period and at a lower interest rate.

Secured or unsecured, always consider the total cost of the loan. If you borrow funds at a low interest rate, bear in mind that costs can accumulate over the long term.

Secured business loans aren’t for everyone. A startup, for instance, simply might not have the assets yet. If you’re unable or unwilling to get a secured business loan, there are many alternative financing options to explore, including:

• Business credit cards

• Overdrafts

• Revolving credit facilities

• Merchant cash advances

Risk to business assets

You can’t get a secured business loan if you don’t have a business asset to use as security, or do but aren’t willing to offer it as security for a loan (for example, because you don’t want to risk losing it if you can’t meet the repayments). Remember: if you don’t repay your business loan the lender can sell the asset to recoup the costs.

Fees

It’s likely that you’ll have to pay upfront costs when taking out secured finance. For instance, if you’re using property as security, you may have to pay valuation fees and legal fees if the lender puts a legal charge on it. You will still have to meet the costs of valuation if your loan is declined or you are offered a smaller amount.

Not as fast

It can take longer to get a secured business loan because of the lender’s due diligence processes. It’s a good idea to have all your relevant business paperwork together when you apply, to avoid any unnecessary delays.

You can use Funding Options to apply for a secured or unsecured business loan. The process is quick – you’ll typically receive a decision within 24 hours. Just tell us how much you need to borrow and what it's for, and we’ll compare 120+ lenders to match your business with the right finance options for its needs.