Secured lending provides businesses with the opportunity to access flexible and affordable capital by offering one or more assets as collateral. A secured business loan can be an ideal option for small and large businesses where substantial sums of money are needed quickly.
In our introductory guide to secured business loans for SME, you will find all the insights and information needed to determine whether secured lending is right for your business.
Secured business loans are financial products issued on the basis of the security offered by the borrower. Also referred to as asset-backed lending, the applicant uses one or more business assets as an ‘insurance policy’ of sorts to cover the costs of the loan.
Depending on the value of the asset (or assets) the loan is secured against, secured business loans can be provided for any amount. Secured loans are considered a lower-risk product by lenders as they are backed by assets of value, enabling them to be offered at more competitive rates of interest than unsecured loans and for larger amounts.
The borrower’s assets, however, may be repossessed by the lender in the case of non-repayment.
Most business loans are provided as bespoke solutions, negotiated between the business and the lenders in accordance with the borrower’s requirements. Secured borrowing is typically far more flexible than unsecured borrowing, often enabling a business to repay the balance gradually over a longer period of time.
Other typical features of secured business loans include the following:
Ensuring you get the best possible deal on a secured business loan means comparing as many deals as possible with the help of an independent broker. Specialist lenders often offer their services exclusively via established brokers, so it is essential to seek broker support rather than approaching lenders directly.
Secured lending can be advantageous for SMEs in many ways, including but not limited to the following:
Depending on the type of secured business loan you apply for, arranging the facility can also be much quicker and easier than organising a comparable unsecured loan.