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Debentures and floating charges: how secured business lending works
If your company has ever borrowed from a bank, you may have been asked to grant a debenture. The word sounds archaic and the document is dense, but the idea behind it is simple: it is how a lender takes security over a company so that, if the loan is not repaid, the lender has a claim on the company’s assets ahead of ordinary creditors. This piece explains what a debenture is, how a fixed charge differs from a floating one, how these are registered at Companies House, and why Credicorp’s lending deliberately works the other way — unsecured, with no personal guarantee. It is general information, not advice; take your own professional advice on any document put in front of your company.
What a debenture actually is
A debenture is a written agreement under which a company grants a lender security over its assets to back a debt. In everyday use, the term covers the whole instrument: the loan obligation, the charges that secure it, and the lender’s rights if the company defaults. The key word is security. An unsecured loan is just a promise to repay; a secured loan attaches that promise to specific property, so the lender can look to the asset rather than queue with everyone else if things go wrong. A debenture is the vehicle that creates that attachment over a company’s assets.
Because a company is a body corporate — a legal person in its own right — it can own property and grant charges over that property in its own name. A debenture is therefore a company-level instrument. It is granted by the company, signed on the company’s behalf, and bites on the company’s assets. That is a separate question from whether a director has also been asked to give a personal guarantee, which is a different document doing a different job.
Fixed charges versus floating charges
Inside most debentures sit two kinds of charge, and the difference between them matters a great deal in a default.
A fixed charge attaches to a specific, identifiable asset — a particular property, a named piece of plant, sometimes book debts. While the charge is in place the company cannot freely sell or deal with that asset without the lender’s consent. Because the lender has locked onto a defined thing, a fixed charge ranks highly: the charge-holder generally has first claim on that asset’s proceeds.
A floating charge hovers over a shifting class of assets — typically stock, raw materials, cash and other things that come and go in the ordinary course of trade. The company can keep buying, selling and using those assets as normal, because the charge “floats” above the pool rather than fixing on any one item. On a default or insolvency, the charge crystallises: it drops down and fixes on whatever is in the pool at that moment. A floating charge is more flexible for the company day to day, but it ranks below fixed charges and below certain preferential claims when the money is shared out.
Registration at Companies House
A charge created by a company over its assets generally has to be registered at Companies House within 21 days of being created. This is set out in the charge-registration provisions of the Companies Act 2006. The point of registration is transparency: once a charge is on the register, anyone — a supplier, a prospective lender, a buyer — can see that the company’s assets are already encumbered and by whom.
The consequence of not registering in time is severe: an unregistered charge that should have been registered is generally void against a liquidator, administrator and other creditors, even though the underlying debt remains payable. In plain terms, the lender can lose the very security it bargained for. That is why a company’s charges history at Companies House is something both lenders and counterparties read closely — it tells you who, if anyone, already has a claim over the business. Our companion guide to secured versus unsecured business borrowing walks through how to read that picture.
Why secured lending is structured this way
Security exists to reduce a lender’s risk, and reduced risk usually buys a borrower a larger sum, a longer term, or a finer rate. For a substantial, longer-lived borrowing — buying premises, funding an acquisition — a debenture can be a perfectly sensible structure: the company pledges assets that outlast the loan, and the cost reflects the lower risk. The trade-off is real, though. A debenture constrains what the company can do with charged assets, it is visible on the public register, and on default the lender can enforce against those assets — potentially appointing an administrator over the company. It is a serious commitment, and one to weigh with your accountant or solicitor before signing.
Where Credicorp sits — unsecured, no personal guarantee
Credicorp’s short-term products are deliberately on the other side of this line. The Business Bridging Loan, Credicorp Flex and Credicorp Slice are unsecured: there is no debenture, no fixed or floating charge over the company’s assets, and nothing registered against the company at Companies House for these facilities. And Credicorp does not take a personal guarantee either, so the director’s own assets are not pulled in through a side agreement. That combination is a feature of the model: the amounts are small and the terms short precisely because the lender is not taking security and is relying on the company’s own trading to repay.
This also fits the regulatory shape of the lending. The borrower is always the company — a UK limited company, LLP or PLC — never the director as an individual, which is why the lending sits outside the FCA consumer-credit regime under Article 60B of the FSMA Regulated Activities Order. No security and no guarantee keeps a short company cash gap from quietly becoming a charge on the business or a claim on a director’s home.
The honest summary
A debenture is how a lender takes security over a company; inside it, a fixed charge locks onto named assets while a floating charge hovers over the shifting pool of stock and cash until it crystallises. Charges must be registered at Companies House within 21 days, and an unregistered charge can be void against other creditors. Secured lending is a reasonable structure for large, long-lived borrowing — but it is a real commitment, visible on the public register, and worth proper advice. Where a need is small and short, Credicorp’s unsecured, no-personal-guarantee approach is the deliberate alternative: no charge, nothing on the register, and the company — not the director — on the hook.