Secured Business Loans

If you’re a business owner looking to access additional funds by borrowing against property, you might want to use a business loan secured against real estate. Here we’ll explain how this finance works, how to get a secured business loan, and where to find the best rates.

What is a secured business loan?

This borrowing arrangement allows you to use existing assets like property as collateral (security) to access extra funds with a loan. You might need access to money on a short or long-term basis - perhaps to fund projects, buy new equipment, free up monthly cash flow, or help you cover existing business expenses.

Can you get a secured business loan?

Yes, whether you’re a large or small business, you can get a secured business loan - providing you have sufficient assets to use as security. A secured business loan can be an excellent way to leverage your existing assets to access additional funds at competitive rates. 

Here are the typical criteria that will be most significant to lenders who offer secured business loans:

• Value of assets: Lenders will let you borrow a certain amount proportional to the value of the collateral you’re using. Some lenders will consider lending up to 100% of the value of your assets.
• Financial history: Although your business credit history is less important for secured loans compared to unsecured loans, lenders will still look at your credit file and recent company performance. 
• Business loan purpose: Most lenders will want to know how you plan to use the loan. Each lender will specialise in different forms of borrowing based on lending preferences.

How these loans work

Secured business loans work much in the same way as standard secured loans. You borrow a specific amount from a lender and pay back the loan over a set period using an interest rate agreed upon when you took out the loan. 

Two common assets used as collateral for secured business loans include commercial real estate and residential property.

Business loan secured against commercial property

If you own an office, retail space, warehouse or other commercial property - you can use it as collateral. This is particularly useful if your business controls a valuable piece of real estate but you don’t have easy access to cash or more liquid assets. 

Business loan secured by residential property

Another option that’s slightly less common involves using residential property as security for the loan. This comes with additional risks if it’s your personal property - but as a sole trader or limited company - using your equity can help you borrow a large sum at a competitive rate to help your business finances.

How to get a secured business loan

Here are some straightforward steps to follow if you want to get a secured business loan:

1. Gather your details: Along with your personal and business documents (proof of address, identification, and recent company financials), you should get as much information as you can relating to your future business plans and the asset you’re planning to use as collateral.

2. Get expert advice: Don’t worry if you haven’t got an updated valuation for your chosen asset, if you speak with an expert adviser, they can help arrange this. Specialist advice from a broker also means they can help present your secured business loan application in the best way possible.

3. Apply for a secured loan: Once your adviser has checked your company details and assessed the property or asset you want to use as security, they’ll introduce you to the right lender for your specific goals and business needs. This means you’re more likely to get the best rates and the solution you’re looking for.

If you want to speak to one of our experienced advisers who specialises in secured loans for businesses, you can get started here with a free, no obligation chat:

Connect with a secured loans specialist

Speak To An Adviser

Secured business loan lenders

In most cases, it’s best to approach specialist lenders for a secured business loan because they can usually be more flexible and tend to offer the best rates.

Mainstream lenders tend to be quite rigid in terms of borrowing eligibility for business loans, here are some examples to give you an idea:

• Barclays: You might be able to get a secured business loan with Barclays if you’re looking to borrow at least £100,000 and the term can be up to 25 years with fixed or variable rates (and some applicants can get interest-only repayments). 

• HSBC: If you need to borrow between £25,001 and £300,000, HSBC offers secured business loans with terms of between 12 months and 10 years. However, you can only choose a fixed rate and there’s a 1.5% arrangement fee plus a security fee (dependent on your asset valuation). 

• NatWest: With NatWest, it’s possible to get secured business loans from £25,001 to £10 million with a fixed interest rate, or no upper limit for a variable rate, but the maximum term is 25 years. 

Specialist lenders like Aldermore or Paragon are more likely to offer loans tailored to your business needs. However, you might need a tailored solution, so your adviser can walk you through all the most suitable options with the best secured loan rates.

Interest rates for secured business loans in the UK

The rates for secured business loans can be quite low in comparison to other types of lending. This is because the loan terms are usually for long periods and using a high-value asset like property as collateral lowers the risk for lenders. 

Here are some of the main factors that will determine whether you can get the best secured business loan rates:

• How much you borrow: Higher borrowing amounts can mean better rates with some lenders. 
• Loan length: Longer terms sometimes mean lower rates, but not always. 
• Fixed or variable rate: For lenders that offer the option of a fixed or variable rate, this can impact your rates over the life of the loan. 
• Value of asset: Using a higher-value asset can lead to cheaper rates with some lenders.
• Credit history: Certain lenders may offer better rates if you’ve got a spotless credit file, but bad credit is not as much of an issue for a secured business loan. 
• Choice of lender: This might sound obvious, but rates can vary wildly across lenders because each will have specific preferences when it comes to business borrowing. 

Advantages and disadvantages to consider

Here are some of the key advantages of using a secured business loan:

• It’s an efficient way to borrow large sums by leveraging your current property
• Typically, interest rates are much lower than unsecured loans 
• Repayment terms can be flexible, sometimes with an interest-only option
• Some lenders let you choose fixed or variable rates 
• It’s possible to get a secured business loan with bad credit
• Sometimes repayment terms can be 25 years or longer

There are also drawbacks to think about, here are some of the main disadvantages of a secured business loan:

• Some lenders will only accept certain types of property or assets as security
• Asset valuations can vary between lenders
• You can lose the property or collateral if you fail to repay the loan
• Usually, you need to borrow large sums, with limited options for small business loans
• Finding the best lenders is difficult without expert advice
• Certain lenders will charge arrangement fees or security fees

Alternative financing options

Depending on your situation and goals (or if a secured loan isn’t suitable), here are some alternative types of borrowing that could be worth exploring with your adviser:

• Unsecured loan: For smaller sums over a shorter timeframe, an unsecured loan can be useful but usually more expensive because you don’t need to use security.
• Business credit card: You might be able to use a business credit card to cover short-term needs.
• Invoice finance: Some lenders will let you borrow against the value of unpaid invoices. 
• Asset finance: You can sometimes borrow against certain business assets like equipment or machinery. 
• Commercial bridging loan: If you’re looking to invest in commercial property, a commercial bridging loan can provide short-term, interest-only finance. 
• Commercial mortgage: With a business mortgage (commercial mortgage) you can borrow funds to purchase property.
• Remortgaging: It may be possible to remortgage existing property to access funds and release equity.

Why choose Teito for your secured business loan?

Accessing extra funds for your business with a secured loan by leveraging your existing property or assets can open up some fantastic opportunities and financial flexibility.

Our brokers have plenty of experience getting the best rates for business loans. Their industry expertise and relationships with specialist lenders mean they can get the results you want.

Here are some of the reasons companies choose Teito for their secured business loan:

• Our brokers specialise in secured business loans for small and large businesses
• Your initial consultation is free with no obligation to proceed
• We can introduce you to niche lenders with the best rates
• We are 5-star rated on leading review sites

Ready to take advantage of a free, no-obligation chat with a broker who specialises in secured business loans? Get started here.