2 min read
What lenders take as security
For limited companies, the most common security instruments are a fixed and floating charge over all company assets (a debenture), a legal charge over specific property, or an assignment of receivables. The lender registers a charge at Companies House, giving them a priority claim over those assets in an insolvency event.
Personal guarantees from directors are distinct from asset security: they expose the director personally but do not give the lender a charge over company assets.
The cost difference and its limits
Secured lending is priced more keenly because the lender's recovery position in a worst case is stronger. For larger facilities — typically above £100,000 — the margin saving over an unsecured product can be material over the loan term. At lower loan sizes the legal and valuation costs of taking security can erode much of the saving.
These are illustrative observations, not a quote or indication of any specific offer. Pricing depends on the company's financial profile, sector, and the lender's current appetite.
Speed and strategic flexibility
Unsecured lending can often be agreed within days because there is no valuation, no title search, and no charge registration to complete before drawdown. For time-sensitive opportunities — an acquisition with a short exclusivity window, a distressed stock purchase — speed can outweigh the cost premium.
Directors should also consider that pledging a debenture limits flexibility: future lenders will see the registered charge and may require it to be postponed or discharged before extending new facilities.
Growth-stage considerations
Companies in an early growth phase may have limited tangible assets to offer as security. Lenders who focus on commercial lending to SMEs increasingly use cashflow underwriting — assessing debt-service cover from trading income rather than requiring hard asset collateral. This approach suits companies with strong revenue but a light fixed-asset base.
Frequently asked questions
If we give a debenture, does that prevent us from taking any further borrowing?
A first-ranking debenture does not automatically prevent further borrowing, but subsequent lenders will require the first-ranking holder's consent to take any security, or will lend on a second-ranking or unsecured basis. This restricts your options and should be factored into long-term financing strategy.
Is a personal guarantee the same as secured lending?
No. A personal guarantee is a recourse against the director personally and is not a charge on company assets. It provides the lender with an additional recovery route but does not appear as a fixed or floating charge on the Companies House register.
Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.