Secured charge

Definition

A secured charge gives a lender a legal claim over a specific company asset — property, equipment or, via a debenture, company assets generally — as security for a loan. If the company defaults, the lender can recover the debt from the charged asset.

Why it matters

A charge over company assets is different from a personal guarantee, which risks your personal assets. Unsecured, no-PG borrowing avoids both. See secured vs unsecured.

In practice

For a small UK limited company, a secured charge usually surfaces early in the lending conversation, once the lender has established what the business owns outright. A director might offer a charge over a piece of equipment, a commercial property, or agree to a debenture covering the company's assets more broadly. The lender registers the charge, most commonly at Companies House, which puts other creditors on notice that the asset (or the company's assets generally) already stand behind this particular debt.

From the company's side, granting a charge does not usually change day-to-day operations. The business carries on using the charged asset — trading from the premises, running the machinery — for as long as it meets its obligations under the loan. The practical consequence only becomes visible if the company later wants to raise further borrowing against the same asset, or if it defaults: in the first case, a later lender will factor the existing charge into what security remains available; in the second, the charged asset is what the secured lender looks to first.

How lenders read it

Lenders view a secured charge as a way of ranking their claim against other creditors, not simply as a box-ticking formality. Where a debenture creates a charge over the company's assets generally, the order in which charges were registered typically determines who stands where in a shortfall scenario, which is why lenders check the Companies House register for existing charges before agreeing new lending.

A charge also shapes how a lender assesses the proposal in the first place — the nature, quality and encumbrance status of the asset offered as security informs the size and terms a lender is prepared to consider, alongside the wider view of the business referenced in secured vs unsecured borrowing. A charge over one specific asset is treated differently from a debenture spanning the whole business, since the latter gives the lender a broader claim if things go wrong.