Apply For a UK Secured Business Loan To Help You Grow Purchase Stock Employ Staff Expand Pay Suppliers

A secured business loan allows a company to borrow money by using a UK property as security. 

This security significantly reduces the lender’s risk, which increases your chances of getting approved. It also means you can potentially borrow more money over a longer term and at a lower rate, compared to unsecured business loans.

However, this also means that your assets are at risk of being repossessed if you cannot keep up with your secured loan repayments.

• Suitability: Businesses looking to either raise a large amount of funding or young businesses yet to prepare a set of financial accounts.
• Purpose: Any purpose, including working capital, debt consolidation, growth, stock and more.
• Amount: Loans range from £25k to £2m, depending on the lender. Our lenders can offer up to 75% LTV.
• Term: Between 2 and 15 years. 
• Cost: Interest rates start from 10% per annum, and valuation or legal fees may apply.
• Security: Our lenders can secure against a UK residential or commercial property.

A secured business loan works by providing a UK property  as security for the lender. Assets lenders commonly accept include your business’s commercial properties, your residential property or a buy to let property.

A secured business loan works like other types of commercial lending. Once approved, your business will receive the loan, and you will repay what you’ve borrowed plus interest through monthly payments for the agreed-upon term. 

A secured loan for a business can be used for a range of purposes, such as buying new equipment, investing in assets to help your business grow, or consolidating other forms of finance and debt at a more competitive rate.

The main difference is that a secured business loan uses your assets as security; usually a commercial or residential property, and an unsecured business loan does not.

If you can’t repay your secured loan, the lender can repossess the asset to recoup what you still owe, reducing their risk. 

With an unsecured loan, the lender has no security, which means there is more risk to them if you can’t make your repayments. Therefore, the eligibility criteria is usually more strict, and the interest rates are generally higher. Lenders might also offer shorter terms and smaller amounts. 

Unsecured business loans are usually quicker and easier to get than secured loans, provided you meet the entry requirements. This is because the lender does not need to inspect or value any assets. 

These valuations involve legal costs, which you’ll have to pay upfront. By contrast, an unsecured loan doesn’t usually involve any additional upfront costs.

Some of the most common assets used as collateral include:

• Residential properties
• Commercial properties
• Semi-commercial properties
• Buy-to-let properties

Please note that we do not accept overseas property as security at Aurora Capital.

It’s possible to secure against a property with an existing mortgage. In this instance, the mortgage will be the ‘first charge’ and the secured loan will be the ‘second charge’. This means if the property is repossessed, the mortgage will take preference and be repaid before the loan.

With a secured business loan, you can borrow between £25,000 and £2 million over a term of up to 15 years. However, the amount you can borrow ultimately depends on the equity in the property.  

Typically, you can borrow up to 75% LTV (loan to value); however, this will depend on the type of property you use as collateral. 

For example, if you have a property worth £500,000 with a £200,000 mortgage, the maximum you can borrow would be £175k (£500k x 75% = £375k – £200k = £175k).

To apply for a UK business loan, you need to:

1. Work out how much you need to borrow and what repayments you can afford.
2. Decide what asset you want to use as collateral.
3. Find and compare funding options with Aurora Capital today.
4. Apply for the right secured loan for your business.

Use our secured business loan calculator below to help you work out how much you can afford to borrow.

To be eligible for a secured loan, you will need to own a UK property to use as security. The property must have enough equity to cover the amount you want to borrow. 

Other standard eligibility requirements for all business loans include:

• Being a UK resident with a business registered in the UK
• Having a clear purpose for the loan
• Have an open UK business bank account

Secured loans can be easier to get if you don’t have a good credit history because the security reduces the lender’s risk. However, most lenders will still check your credit score as part of their application process.

When you apply for business finance with Aurora Capital, we can assess your eligibility within minutes without impacting your credit score.

Find out how to navigate the application process and maximise your eligibility chances here.

Before you apply for a secured business loan, you must weigh the pros and cons.

Pros of secured business loans

• They can be easier to get if you have a poor credit score
• You may be able to borrow more than with an unsecured loan
• Interest rates can be lower than unsecured business loans
• You may be able to borrow over a longer term, which can mean lower monthly repayments

Cons of secured business loans

• You need to have a suitable UK property to secure on
• Any asset you use as collateral will be at risk if you can’t keep up with your repayments
• The application process can take a lot longer than an unsecured loan
• There are often upfront costs associated with a secured loan, including valuation and legal fees

If you don’t have an asset to use as security or don’t want to put any of your property at risk, there are several other business finance options you could consider:

• Unsecured business loans: This allows you to borrow without providing an asset as collateral, but they can be more expensive and have more stringent eligibility criteria. 
• Bridging loans: A business bridging loan can help bridge the gap between a big purchase and incoming cash. It’s a type of secured loan but is designed to be short-term. 
• Asset finance: If you want to buy new assets like equipment or vehicles, this type of borrowing allows you to spread the cost over time. 
• Revolving credit line: This allows you to access a line of credit up to a set limit until the end of the agreement. It is designed to help alleviate minor cash flow issues.  
• Invoice finance: This is a short-term credit solution that allows you to release money from your unpaid invoices. 
• Merchant cash advance: This is a way to borrow against future card sales. You repay a fixed percentage of your card transactions until the loan is repaid.
• Peer-to-peer lending: A peer-to-peer business loan is a way of borrowing directly from investors, usually via an online platform.