# Secured versus unsecured business borrowing.

When a company borrows, the agreement is either secured — tied to specific assets the lender can claim — or unsecured. This guide explains the difference, what a debenture or charge actually is, and what "no personal guarantee" means in practice. Three terms that decide what a lender can reach if things go wrong.

## Secured and unsecured, defined

The difference is what the lender can claim if the debt is not repaid.

**Secured** borrowing is tied to an asset. The lender takes security — a legal right over something the company owns — so that, if the company does not repay, the lender can take or sell that asset to recover what it is owed. A mortgage over premises and asset finance over a vehicle are both secured: the building or the vehicle stands behind the debt.

**Unsecured** borrowing is not tied to a specific asset. The lender relies on the company's promise to repay and on its general creditworthiness. If the company fails to repay, an unsecured lender ranks as an ordinary creditor and has no particular asset to claim ahead of others. Most short-term facilities, business credit cards and small working-capital products are unsecured.

Secured borrowing is usually cheaper and larger, because the lender's risk is lower — it has something to fall back on. The trade-off is that the company pledges assets and the arrangement takes longer to put in place. Unsecured borrowing is faster and lighter, but typically smaller and priced for the higher risk the lender carries.

## What a debenture or charge is

The legal instrument that turns "secured" into something a lender can enforce.

A **charge** is a legal interest a lender takes over a company asset as security. There are two broad kinds. A **fixed charge** attaches to a specific, identified asset — a particular property or machine — which the company then cannot sell freely without the lender's consent. A **floating charge** hovers over a class of changing assets, such as stock or trade debtors, letting the company use and replace them in the ordinary course of business until the charge "crystallises" on a default.

A **debenture** is the document that typically grants a lender a package of these charges — often a fixed charge over major assets and a floating charge over the rest of the business. A debenture given by a UK company is registered at Companies House, so it appears on the public record and other lenders can see it. It is a serious commitment of the company's assets, and it is the standard way bank term lending to a company is secured.

Because security is registered and ranked, the order in which charges were taken matters: an earlier-ranking charge is paid before a later one. A company that has already given a debenture to one lender may find a second lender unwilling to lend, or willing only on a lower ranking. This is part of why small, short-term, unsecured products exist — they avoid the cost, delay and entanglement of taking security at all.

## What "no personal guarantee" means

Security over company assets is one thing. A claim on a director personally is another.

Security and guarantees are often confused, but they sit in different places. A charge gives the lender a right over *company* assets. A **personal guarantee** gives the lender a right against a *director* personally — a promise that, if the company cannot pay, the director will. A guarantee turns a company debt into a personal debt, reaching past the company to the individual's own money and, sometimes, their home.

A loan can be unsecured against the company and still carry a personal guarantee. Many small-business facilities are exactly that: no charge over company assets, but a director's signature standing behind the debt. So "unsecured" alone does not tell a director whether their personal position is exposed. The question to ask is separate: *is a personal guarantee required?*

Credicorp's products are unsecured and take **no personal guarantee**. There is no debenture or charge over the company's assets, and no director is asked to stand behind the company's borrowing. The borrower is the body corporate, and the company's exposure is bounded by the 100% cost cap. Our companion guide, [personal guarantees explained](/guides/personal-guarantees-explained/), covers how a guarantee works and why Credicorp deliberately does not take one — see also the article on [why we don't take personal guarantees](/articles/why-we-dont-take-personal-guarantees/).

## The three terms, side by side

What each one lets a lender reach.

| Term | What it gives the lender | What is exposed |
| --- | --- | --- |
| Secured (charge/debenture) | A right over specific or floating company assets | The company's assets, in a registered ranking |
| Unsecured | Only the company's promise to repay | Nothing specific; lender ranks as an ordinary creditor |
| Personal guarantee | A claim against a director if the company cannot pay | The director's personal money and assets |

Read the rows as independent questions, not a single sliding scale. A borrowing can be secured or unsecured, and separately can carry a guarantee or not. Credicorp's products are unsecured and carry no guarantee — the bottom-right exposures do not arise.

## Where to go next
- [Personal guarantees explained](/guides/personal-guarantees-explained/) — how a guarantee turns company debt into personal debt
- [Cost caps explained](/guides/cost-caps-explained/) — how the 100% cap bounds the company's exposure
- [The three Credicorp products](/products/) — unsecured, no personal guarantee
- [Lending and regulation](/lending-and-regulation/) — why this is body-corporate lending under Article 60B
- [Glossary](/glossary/) — plain-English definitions of the terms used here

[Apply for a Business Bridging Loan at credicorp.co.uk →](https://credicorp.co.uk/business-loans/)