Finance Guide: Secured LoansPublished on 11th May 2016 2016-05-11T10:17:42+00:00 - Last update on 9th December 2019 2019-12-09T18:29:32+00:00
Secured Loans: an overview
A secured loan product enables a lender to lend money to a business for any business purpose, as long as the borrower pledges an asset as security – otherwise known as collateral – against the debt. Secured loans can be used for a wide range of purposes including growth finance, purchasing assets or simply general working capital and cash flow requirements.
This type of product provides an opportunity for businesses to raise funding if they have not been successful elsewhere, however, as well as being suitable for businesses with a challenging credit profile or new start-ups, this product also provides established businesses with a very quick route to raising finance. Because this type of financing is secured against specified assets, it can often be a very cost effective form of financing. The underwriting procedure is not based purely on credit scoring at the company level, as each individual application is considered on its own merits and the value of the pledged collateral or security.
Secured business loans can range from £25k to £3m. They can be secured against assets such as existing stock, equipment or vehicles, or residential or commercial property via a first, second or third charge, with repayment terms from three months to ten years.
The repayment terms are very flexible and can incorporate seasonal payments and payment holidays. Due to the strong nature of the security of these types of agreements the turnaround is very quick with a proposal turnaround time of 2 to 3 days and a completion target of 4 to 6 weeks.
Making sure you have the right finance for your business is complex and can often be confusing.
There are so many options that can seem very similar, but which when reviewed closely can be very different in terms of monthly payments, overall costs, up-front fees and terms and conditions.
If you’d like to talk to one of our Business Finance Specialists:
Call us on 020 3637 2455
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