What is the difference between a fixed and a floating charge?

A fixed charge attaches to specific, identifiable assets like property; a floating charge hovers over changing assets like stock until it crystallises. Fixed-charge holders rank higher on those assets in a failure. A fixed charge locks onto a named asset — you cannot sell it freely without the lender’s consent. A floating charge sits over a shifting pool such as stock or receivables, letting you trade until an event of default crystallises it into a fixed charge.

What is the difference between a fixed and a

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FixedSpecific assets

FloatingChanging assets

RankFixed is higher

Two kinds of security

A fixed charge locks onto a named asset — you cannot sell it freely without the lender’s consent. A floating charge sits over a shifting pool such as stock or receivables, letting you trade until an event of default crystallises it into a fixed charge.

Why priority differs

On those specific assets, fixed-charge holders are paid before floating-charge holders and preferential creditors. This ranking is what makes security valuable to a lender — see how charges affect other lenders.

What it means for you

Credicorp lends to your company, not to you personally, and takes no personal guarantee. Credicorp’s standard unsecured facility registers neither charge, leaving your assets unencumbered. See business loans or apply online.

Frequently asked questions

Which ranks higher, a fixed or floating charge?

On the specific assets it covers, a fixed charge ranks above a floating charge and preferential creditors, so its holder is paid first from those assets.

What is crystallisation?

It is when a floating charge converts to a fixed charge on the assets it covers, typically on an event of default, freezing your ability to deal with them.