How to get a Business Loan Secured by Real Estate in the UK?

business loan secured by real estate

A business loan secured by real estate is a commercial funding option. It allows business owners to borrow huge funds against any of the assets they pledge as collateral. This option is also called a secured business loan. This loan type offers a longer tenure as compared to the short ones with no collateral. Also, the interest rate in a collateral-based loan option is quite low. 

What are the uses of secured business loans?

The funds you obtain through this loan option can be used for many purposes. The obtained money is used to –

  • Fund a refurbishment of premises.
  • To purchase commercial property
  • Attainment of working capital 
  • Complete a commercial buy-out deal
  • Cover the overall or partial cost of a new machine.

Asset types that can be secured against funds

Several types of assets can be used to obtain funds against them. Read them below. 

  • Land 
  • Property 
  • Vehicles 
  • Account receivables
  • Machinery 

The business owners usually use the assets mentioned above to get the approval. The reason is that these all are of high value, and a secured loan is always obtained to borrow a large amount of money. However, the depreciation factor is an important point the lender may consider before providing a long-term business loan. You should always pledge an asset that is not depreciated much. 

What are the terms and conditions for secured commercial loans?

Before applying, it is better to know what exactly you need to apply for the loans through secured funds. 

  • The minimum and maximum loan amount available is £5,000 to £5 Million. The maximum amount may differ depending on the lenders.
  • Secure loan tenure can be a minimum of 5 years to a maximum of 25 years. Again, the minimum and maximum limits can change depending on the lenders.
  • Past repayment history in any previous secure loans will always be a point of attraction for the lender. Paying your obligations on time before applying for a secure loan is always advisable. 

Borrowing procedure 

Getting loan approval when you pledge an asset is easier, as the lender can take ownership of the asset in case of non-repayment. 98% of secured loans get approved. However, you will have to follow a decided procedure to ensure a smooth reach of funds. 

Here is the generic procedure most lenders follow to approve funds for business owners. 

  • Select a lender or direct lender that offers customer-friendly lenders like TheBusinessFunds and leave your query. 
  • The lender will provide you a quote with a mention of the loan amount, tenure and interest rate. 
  • You will receive a customised deal once you accept the quote from a lender.
  • The lender will start processing your loan application, demanding the necessary documents. In the case of a direct lender, documentation always happens online. However, asset verification happens on-site, and you will need to provide the necessary asset documents.
  • After the entire process and your eligibility check, the lender approves a certain amount you qualify for. 
  • Once you give acceptance, the fund deposit happens in a maximum of 24 hours. 

It takes one week to complete the process of secured business loans. However, depending on the financial circumstances of the applicant, this time, many reduce or increase a bit. 

What are the advantages of secured business loans?

If you own a business, for sure you know that there are multiple reasons to obtain funds through this loan choice. Below are the major advantages of long-term business loans. 

Cheap option in all aspects – When you pledge your asset, the lender feels secure that it is doing a safe deal. In case of non-repayment of funds, the asset pledged against the funds will cover up the loss. It is why, in return, the lender offers you an impressively lower rate on a big loan amount, and also, the monthly instalments are small. In fact, it is not about the lender, and it is the legal obligation of the lending industry to keep the cost of the secured funding low.

A bad credit score is not an issue – of course, it is much easier to borrow secured funds with bad credit as compared to unsecured funds. With all the unpredictable economic chaos spread in the world, bad credit has become a common issue in the past few years. But as the show goes on, the business owners must continue working despite their poor credit scores. However, the option of funding through pledging assets gives them a sigh of relief. 

Long-repayment terms and credit score rise – Your asset protects you as a borrower in many ways. Two of them are that you can repay funds over a long period of time, which makes managing the instalments easier. On the other hand, if you have bad credit, repaying on time improves your credit rating fast. It will not be an exaggeration to call the secured loan for businesses an all-rounder. 

Secured Vs Unsecured Business Loans

You know what, no loan option is bad because all options have their strengths as well as weaknesses. That’s why we cannot be biased because every loan option helps the business owners in some way or another. But to make a wise choice and for the sake of financial literacy, one should know the comparison between the two loan choices. Here is a comparison between the secure and the unsecured ones. 

Secured business loansUnsecured business loans
Funds secured against a business asset such as land, machine etc. Funds not secured by any asset. The borrower’s repayment capacity is the prime factor of eligibility.
Borrowers can borrow a big loan amount, loan tenure is long, and the interest rate is low. All this happens due to the asset a borrower pledges. With no long tenure, one can obtain funds for a short term. The rate of interest is higher. But the loans are a great option for short-term requirements. 
Bad credit score applicants can quickly get approval due to the presence of collateral. Also, it can improve credit rating through improved financial behaviour on the part of repayments. Borrowers with a poor credit rating may have problems obtaining funds. However, if the past six months’ finances show improvement, money can be obtained through a direct lender. 
A secured business loan is usually suited to established businesses that own high-value assets.It is helpful for established businesses but more so for small and start-up ones. The small-scale commercial entities may not own assets they can pledge against funds. 


Secured loans for business purposes are worldwide popular. The United Kingdom is always friendly to its business owners. Direct lenders are even more flexible and friendly for borrowers with commercial purposes. 

If you are looking forward to attaining funds against your business property, the information above is a guide for you. Borrow money wisely, repay timely and let the money obtained feed your business goals. Opportunities never wait for anyone. It’s your time. ALL THE BEST!

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