What is a secured business loan?

Secured business loans are a form of business financing where the borrower provides collateral, such as property or equipment, to secure the loan.

This collateral acts as a safety net for the lender, which can result in benefits for the borrower, including lower interest rates and the possibility of getting a higher loan amount on their loan. However, it is important to point out that if the borrower is unable to repay their debts, the lender has the right to seize and sell the collateral.

What can I use a secured business loan for?

A secured business loan can be used for:


Secured business loans are commonly used for securing property for businesses that are looking to expand


Businesses in retail or manufacturing might use secured business loans to purchase inventory, especially during peak seasons.

Business refurbishment

If a business is in need of refurbishment, a secured business loan can be used to help fund it. At Mercantile Trust, we offer light and heavy refurbishment loans.

Emergency expenses

In unforeseen circumstances, a secured business loan can provide financial stability to navigate through challenging times.

What are the advantages of a secured business loan?

Secured business loans offer several advantages for businesses, making them a popular choice for financing.

Improved cash flow

Secured business loans tend to have lower interest rates than unsecured business loans. This is because they are secured on assets such as property, meaning that if the borrower is unable to repay the loan the lender is able to seize the property.  Lower interest rates contribute to more manageable monthly payments, which may potentially improve a business’s cash flow. This can be crucial for businesses with fluctuating income.

Easier approval for poor credit

People with poor credit are more likely to be approved for a secured business loan in comparison to an unsecured loan. The collateral acts as a form of security for the lender, making them more willing to extend credit to businesses with lower credit scores.

Secured business loans are flexible

Businesses can use the funds from secured loans for various purposes, including getting access to capital quickly, business expansion, equipment purchase, and debt consolidation. This flexibility allows businesses to address different financial needs.

Credit history

Successfully managing a secured business loan and making timely payments can positively impact a borrower’s credit history, potentially improving their creditworthiness for future financing needs.

What are the disadvantages of a secured business loan?

While secured business loans offer advantages, they also come with certain disadvantages that businesses should carefully consider before choosing this type of financing:

Risk of asset loss

The most significant disadvantage is the risk of losing the collateral if the business fails to repay the loan. This can have severe consequences, especially if the collateral is an important asset for the business.

Limited use of funds

Some lenders may enforce restrictions on how businesses can use the funds from secured loans, limiting flexibility compared to unsecured loans.

What is the difference between a secured and unsecured business loan?

The main difference between a secured and unsecured business loan lies in collateral. In a secured loan, the borrower guarantees assets, such as property, to secure the loan. On the other hand, unsecured loans don't require collateral, which can make the approval process quicker. However, this often results in higher interest rates and lower loan amounts.

Secured loans offer reduced risk for lenders, the drawback is the potential loss of assets if the borrower is unable to make their monthly payments. As unsecured loans have no collateral, they pose higher risk for lenders, hence why they are harder to obtain and can sometimes cost more than secured loans.

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Our flexible approach


We are proud to be a lender who can deliver loans at a fast approach, to consumers. We make this possible by carrying out our own legal checks, in house for loans under 100k, within hours. We can offer automated valuations, which are available to produce financial solutions in an instant.

Mercantile Trust regularly help their customers carry out renovations with heavy refurbishment loans, by providing finance fast.

No minimum income

At Mercantile Trust, we put our customers at the forefront of what we do.

We offer top slicing, where we can use your personal income when carrying out affordability calculations. If your rental income does not cover your mortgage repayments, we will top up the remaining amount that you cannot cover so you are able to get the loan you require.

No Exit Fees

We want you to be in control of your finance.
With no early repayment or exit fees, Mercantile Trust will strive to find a loan to meet your financial requirements.

Our bridging loan criteria

We aim to help absolutely everyone, however there are certain criteria that must be met in order to make a successful application:

  • Unregulated bridging applications only
  • Rates from 0.99%
  • Up to 75% loan to value
  • Most property constructions accepted
  • No personal income requirement
  • No exit fees
  • Minimum property value £75k
  • Minimum advance £25k max £500k
  • Confirmation of exit required
  • Minimum of one buy to let or residential property required
  • Serviced and rolled interest available
  • No ERC (Early Repayment Charge)
  • First and second charge available