Secured business loans put your property equity to work
Borrow against commercial property, investment property or, in some cases, your home to raise larger sums over longer terms than unsecured lending usually allows.
- Larger amounts possible
- Longer repayment terms
- First or second charge
- Broker, not a lender
Nexgen Business Finance Limited is a credit broker, not a lender, and an Appointed Representative of AFS Compliance Limited, authorised and regulated by the Financial Conduct Authority (FRN 625035).
What is a secured business loan?
A secured business loan is borrowing backed by an asset, most often property, that the lender can take a legal charge over. Because the lender has security, secured loans can often offer larger amounts, longer terms and lower costs than unsecured borrowing.
The British Business Bank explains that with a secured loan you use an asset as security, usually property, and that a lender may also accept a guarantee instead of or alongside other security. Unsecured loans typically cost more because they are riskier for the lender. Security can be business premises, an investment property, land or, for some borrowers, a director's or owner's home.
If a property already has a mortgage, it may still be possible to borrow with a second charge, which sits behind the existing lender and lets you use the equity without refinancing the first mortgage. Lenders typically look at the combined borrowing against the property's value, alongside your business's ability to repay.
We compare secured lenders across our panel, from banks to specialist and second charge lenders, and explain the security, guarantees and costs involved in plain English. For borrowing against equipment and vehicles rather than property, see asset refinance.
Key features
Larger loan amounts
Security can support higher borrowing than an unsecured loan for the same business.
Longer terms
Repayments can often be spread over many years, keeping monthly costs lower.
Use existing equity
Release value from property without selling it or refinancing the main mortgage.
Often lower cost
Secured borrowing is typically cheaper than unsecured lending, depending on your circumstances.
Flexible purpose
Use funds for growth, acquisitions, refinancing or working capital.
Lenders compared
We compare first and second charge lenders to find terms that fit your plans.
What businesses use it for
- Expansion and new premises
- Buying another business
- Consolidating expensive debt
- Large stock or contract costs
- Funding a property deposit
- Longer-term working capital
Secured vs unsecured business loans
| Secured business loan | Unsecured business loan | |
|---|---|---|
| Security | Charge over property or assets | No asset charge, guarantees common |
| Typical amounts | Larger, linked to equity | Smaller, linked to turnover |
| Typical terms | Up to 15 years or more | Up to around 5 – 7 years |
| Cost | Often lower | Often higher |
| Speed | Slower, valuation and legal work needed | Often quicker |
| Main risk | Property may be repossessed | Personal guarantee may be called |
Borrowing against your home for business
Some business owners use equity in their own home to support business borrowing, either as direct security or alongside a personal guarantee. This can open up larger amounts or better terms, but it puts your home at risk if the business cannot repay. It is a serious decision and we always recommend taking independent legal advice before giving a charge over your home.
Depending on who is borrowing and how the loan is structured, a loan secured on a home can fall under FCA mortgage regulation, which brings different rules and protections. We will explain whether that applies to you at the start.
First charge vs second charge
A first charge lender is repaid first if the property is sold. A second charge lender ranks behind the first and usually needs the first lender's consent or notification. Second charge loans can be quicker than remortgaging and avoid early repayment charges on your existing mortgage, but are often more expensive than first charge borrowing.
What lenders typically look at
- Details of the property offered as security and any existing mortgage
- Filed accounts and management accounts showing affordability
- Recent business bank statements
- A clear purpose for the funds and how they will be repaid
- Consent from all legal owners of the property
- Identity, credit and asset and liability details for directors or guarantors
Things to consider
- Your property, including your home if used as security, may be repossessed if you do not keep up repayments on a loan secured on it.
- Personal guarantees from directors are often required in addition to property security.
- Valuation, legal and arrangement fees apply, and early repayment charges may apply on some loans.
- Securing short-term needs over a long term can increase the total interest you pay.
- Variable rates can rise, increasing your monthly repayments.
Sources checked
Information checked on . General information only, not financial, legal or tax advice. Finance is subject to status and lender approval.
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Secured business loans questions
What can I use as security?
Most secured business loans are secured on property: commercial premises, investment property, land or sometimes a residential home. Some lenders also accept other assets. Equipment and vehicles are usually funded through asset finance or asset refinance instead.
Can I get a secured loan if my property already has a mortgage?
Often, yes. A second charge loan lets you borrow against the remaining equity without replacing your existing mortgage. Lenders will look at the combined borrowing compared with the property's value.
Is a secured loan cheaper than an unsecured loan?
Secured borrowing is typically cheaper because the lender's risk is lower, but this depends on the lender, the security and your circumstances. Fees for valuations and legal work can make it less cost-effective for smaller amounts.
How long does a secured business loan take?
Because a valuation and legal work are needed, secured loans usually take longer than unsecured loans, often a few weeks. Having property details, accounts and ID ready helps speed things up.
What happens if I can't repay?
If you fall behind, contact your lender as early as possible, as they may be able to agree a plan. If repayments are not kept up, the lender can ultimately take steps to repossess and sell the property, and may call on any personal guarantees.
Are you the lender?
No. Nexgen Business Finance is a credit broker, not a lender. We compare secured lenders from our panel and help you understand the terms before you commit.
Other ways to fund your business
Not quite the right fit? We arrange every major type of business finance and can compare options side by side for you.
Unsecured business loans
£5k – £500k · 1 month – 7 yearsA lump sum for growth, cash flow, stock, hiring or marketing, with no asset security.
Find out moreCommercial mortgages
£100k – £10m+ · 1 – 30 yearsBuy or refinance business premises and commercial investment property over the long term.
Find out moreBridging loans
£50k – £10m+ · 1 – 18 monthsShort-term property-secured funding for auctions, quick purchases and refurbishments.
Find out moreAsset refinance
£50k – £10m · 1 – 8 yearsRaise cash against equipment or vehicles you already own.
Find out moreShort-term business loans
£5k – £500k · 3 – 24 monthsA lump sum for working capital, repaid over months rather than years.
Find out moreNot sure which is right for you? Tell us what you need and we'll recommend the best option.
Helpful guides
What is a personal guarantee on a business loan?
How PGs work, what you could be liable for, how to limit the risk and questions to ask before you sign.
Read the guideHow much can my business borrow?
See how lenders size loans from turnover, profit, assets and invoices, with typical UK ranges.
Read the guideHow to Secure New Business Loans: A Comprehensive Guide for Entrepreneurs
Explore UK funding options, evidence requirements by trading stage, Start Up Loans terms, and personal guarantee risks before applying for b
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