For most types of loan the lender or its advisers will prepare the first drafts of the legal documents, which will usually be based on the lender's standard terms (see Q&A 2 and Q&A 3).

With a family or friend lender the position is more flexible and it is more likely that you will agree terms collaboratively.

Most lenders will have a standard set of documents they use for the type of loan you are proposing for your business and which they will typically make available for your review when negotiations are advanced.

If you are thinking of borrowing from a peer-to-peer platformAn internet-based platform regulated by the FCA which matches lenders with borrowers and is an alternative source of finance to banks. Investors can each lend a small part of an overall loan which encourages multiple lenders to a business. The platform will usually require a positive trading history and will carry out credit checks. Interest can be fixed although in some cases investors can be asked to bid a rate and borrowers can then choose the lowest. Loans through a peer-to-peer platform can range from several thousand to several million pounds. or crowdfunding platformA platform which matches companies with share investors or lenders via the internet. There are three forms of funding (crowdfunding) enabled by a crowdfund platform: (1) where every investor or lender becomes a direct shareholder in or lender to the company concerned; (2) where one investor or lender leads the fund-raising, carries out due diligence and negotiates terms, and the other investors or lenders (the crowd) follow; (3) where the investors hold their shares or lenders hold their loans via a nominee company which is operated by the platform. , you should be able to view most of the loan terms on its website

Lenders' template documents will have been produced following a careful internal approval process and probably with the benefit of external as well as internal legal advice. You will need to review these carefully before signing and you should:

1. bear in mind that the terms will have been put together primarily to protect the lender's interests and not yours as borrower, and think about getting expert legal advice to guide you;

2. make sure you have been given a copy of the full set of proposed terms and conditions to review, including any terms referred to but contained elsewhere (which may still be binding on you);

3. understand that by signing a set of standard documents, you will still be creating a contract between you and the lender on the terms set out in the documents; and

4. not be put off by a lender's unwillingness to discuss changes to its documents – a good legal adviser should be able to guide you on which points to negotiate.

For access to a specialist lawyer who can advise you on negotiations with a lender, you can use our Ask a Lawyer service.

A term sheetIn relation to a share investment or loan, a term sheet is signed by the relevant parties at the outset of negotiations and sets out the important points of principle of the investment or loan. The signed term sheet will form the basis of the legal documents. A term sheet is not usually legally binding unless the investor or lender is given exclusivity for a period, in which case this part of the term sheet will be binding. for a loan to your business, which is typically produced by the lender, will set out the key commercial terms of the loan such as:

1. conditions precedent to the loan (see Q&A 7);

2. the amount of interest you have to pay on the loan (see Q&A 8);

3. the amount of the loan and when it must be repaid (see Q&A 9);

4. financial covenantsContractual undertakings from a borrower to a lender about the borrower's financial position. you give (see Q&A 12);

5. fees payable to the lender (see Q&A 15); and

6. what securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. your companyA private company limited by shares incorporated and registered in England and Wales. and possibly your shareholdersIn relation to a company limited by shares, means persons whose names have been entered in the register of members of that company as shareholders in that company. will need to provide for the loan (see Q&A 18 and following).

A term sheetIn relation to a share investment or loan, a term sheet is signed by the relevant parties at the outset of negotiations and sets out the important points of principle of the investment or loan. The signed term sheet will form the basis of the legal documents. A term sheet is not usually legally binding unless the investor or lender is given exclusivity for a period, in which case this part of the term sheet will be binding. will not usually be legally binding but, having agreed the principles, it will be difficult for either you or the lender to move from that position without good reason.You should therefore obtain separate professional advice before signing a term sheetIn relation to a share investment or loan, a term sheet is signed by the relevant parties at the outset of negotiations and sets out the important points of principle of the investment or loan. The signed term sheet will form the basis of the legal documents. A term sheet is not usually legally binding unless the investor or lender is given exclusivity for a period, in which case this part of the term sheet will be binding. for a loan. For access to a specialist lawyer who can advise you on negotiations with a lender, you can use our Ask a Lawyer service.

Conditions precedent are matters which a lender will require to be satisfied before allowing your companyA private company limited by shares incorporated and registered in England and Wales. to borrow. They will depend on your particular loan but typical examples include:

1. satisfactory completion of the lender's investigations into your business;

2. satisfactory checks of your key managers and in some cases taking out key man insurance on them;

3. documentary evidence of your companyA private company limited by shares incorporated and registered in England and Wales. having obtained the approvals it needs for the loan; and

4. securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. for the loan having been provided by your companyA private company limited by shares incorporated and registered in England and Wales. and possibly your shareholdersIn relation to a company limited by shares, means persons whose names have been entered in the register of members of that company as shareholders in that company..

Failure to satisfy a condition precedent may prevent your business being able to borrow. It is therefore important you review all conditions carefully and ensure you are satisfied that they are achievable. If you are in any doubt you should think about getting expert legal advice and then discuss with the lender. For access to a specialist lawyer who can advise you on negotiations with a lender, you can use our Ask a Lawyer service

You will pay interest on your loan at an annual rate expressed as a percentage of the amount borrowed. This rate can either be variable or fixed.

A variable rate is calculated by reference to a benchmark which can move from time to time (up or down) to which is added a fixed percentage referred to as a margin.

A fixed rate will as its name suggests be a fixed number which will not usually change throughout the period of the loan.

The interest rate you pay will depend on the type of loan and how a lender assesses your business as a credit risk; for example:

1. OverdraftsLoans, traditionally provided by the high street banks but now increasingly provided by other lenders, often for smaller amounts to meet working capital and short-term needs and often secured. The loans will be repayable by the borrowers at any time if required by the lenders, will be subject to a credit limit and interest will be payable on the amounts from time to time owing to the lenders. Additional fees will be payable if the credit limits are exceeded.

   If you borrow by way of an overdraftA loan, traditionally provided by the high street banks but now increasingly provided by other lenders, often for smaller amounts to meet working capital and short-term needs and often secured. The loan will be repayable by the borrower at any time if required by the lender, will be subject to a credit limit and interest will be payable on the amount from time to time owing to the lender. Additional fees will be payable if the credit limit is exceeded., you will typically pay variable interest at an annual percentage equal to the lender's base rate from time to time plus a margin. Interest will be payable at regular intervals.

   Interest rates on overdraftsLoans, traditionally provided by the high street banks but now increasingly provided by other lenders, often for smaller amounts to meet working capital and short-term needs and often secured. The loans will be repayable by the borrowers at any time if required by the lenders, will be subject to a credit limit and interest will be payable on the amounts from time to time owing to the lenders. Additional fees will be payable if the credit limits are exceeded. tend to be higher than for other types of loan.

2. Term loans

   The rate of interest you pay on a term loan should be lower than for an overdraftA loan, traditionally provided by the high street banks but now increasingly provided by other lenders, often for smaller amounts to meet working capital and short-term needs and often secured. The loan will be repayable by the borrower at any time if required by the lender, will be subject to a credit limit and interest will be payable on the amount from time to time owing to the lender. Additional fees will be payable if the credit limit is exceeded. and can either be variable or fixed rate.

   If the interest is variable the rate will typically be calculated every three to six months (also known as interest periods) by reference to a benchmark rate, to which an additional annual percentage known as a margin will be added.

3. Peer-to-peer and crowdfund loans

   On some platforms lenders will bid the rate at which they are prepared to lend to you, and you as borrower will be able to accept the average of the rates offered. This may result in you paying a lower rate than with other types of lender.

4. Specialist loans

   For some types of loan, the interest rate will be linked to what the money is being used for – for example, under a leasing agreementAn agreement under which a business rents an asset from a leasing company for a fixed period. The agreement will be in the form of either a finance lease, where the business will pay for the full cost of the asset plus interest, or an operating agreement where the business will pay for the asset for so long as it needs to use it. the rate will cover the leasing companyA private company limited by shares incorporated and registered in England and Wales. 's costs in purchasing the asset being financed.

The interest you pay can, depending on the terms of your loan, increase in certain circumstances. These could include:

1. where the rate you pay is by reference to a benchmark rate which increases, such as the Bank of England base rateThe official interest rate for borrowing money, set by the Bank of England. ;

2. if your business fails to make a payment on time; or

3. (usually included in term loans) if additional regulatory costs are incurred by the lender which are attributable to your loan.

When you are required to repay a loan will depend on the terms of the loan.

1. OverdraftA loan, traditionally provided by the high street banks but now increasingly provided by other lenders, often for smaller amounts to meet working capital and short-term needs and often secured. The loan will be repayable by the borrower at any time if required by the lender, will be subject to a credit limit and interest will be payable on the amount from time to time owing to the lender. Additional fees will be payable if the credit limit is exceeded.

   It is inherent in the terms of an overdraftA loan, traditionally provided by the high street banks but now increasingly provided by other lenders, often for smaller amounts to meet working capital and short-term needs and often secured. The loan will be repayable by the borrower at any time if required by the lender, will be subject to a credit limit and interest will be payable on the amount from time to time owing to the lender. Additional fees will be payable if the credit limit is exceeded., and one of its disadvantages, that the lender will have the right at any time to require you to repay the full amount outstanding.

2. Term loan

   If you borrow under a term loan the lender cannot ask you to repay at any time. Instead there will be a set date or dates when you are required to repay the loan. This is one of the benefits of a term loan compared to an overdraftA loan, traditionally provided by the high street banks but now increasingly provided by other lenders, often for smaller amounts to meet working capital and short-term needs and often secured. The loan will be repayable by the borrower at any time if required by the lender, will be subject to a credit limit and interest will be payable on the amount from time to time owing to the lender. Additional fees will be payable if the credit limit is exceeded..

   However the lender will have the right to demand repayment of the entire amount immediately following an event of defaultAn event defined in a contract which constitutes a default or breach of the contract and gives the non-defaulting party the right to terminate. Often used in an agreement where a company borrows money from a lender, the occurrence of an event of default will entitle the lender to require immediate repayment in full of the loan., which will include failing to make a payment on time and other specified breachesViolations of a legal or moral obligation. of the loan agreement. See Q&A 14 for more information on events of defaultEvents defined in a contract which constitute defaults or breaches of the contract and give the non-defaulting party the right to terminate. Often used in an agreement where a company borrows money from a lender, the occurrence of an event of default will entitle the lender to require immediate repayment in full of the loan..

See Q&A 10 on repaying the loan early.

You should address and negotiate the repayment terms before you sign up to the loan and not afterwards, when it will be too late.

You need to check the terms of your loan to see what happens if you want to repay the loan earlier than the set repayment date or dates because, for example, you have found a cheaper interest rate elsewhere. You will find that lenders typically require you to pay a fee and additional interest for you to be able to do this.

You should address and negotiate the repayment terms before you sign up to the loan and not afterwards, when it will be too late.

Probably.

Your companyA private company limited by shares incorporated and registered in England and Wales. will be required to give representations and warranties Promises or assurances in a contract.for most types of lender. You will find them in the loan agreement and they will typically be repeated periodically for the duration of your loan.

Representations and warranties Promises or assurances in a contract.are statements of fact or of a state of affairs concerning your business which the lender will rely on in lending to you. Typical examples are statements that:

1. your companyA private company limited by shares incorporated and registered in England and Wales. 's audited accounts and key financial information are fair and accurate;

2. there has been no material adverse change in your business since the date of your last audited accounts; and

3. your companyA private company limited by shares incorporated and registered in England and Wales. has obtained all required approvals and has full authority to enter into the loan.

If any representation and warrantyA promise or assurance in a contract. is untrue, the lender will want to have the right to demand immediate repayment of the loan (see Q&A 9). A breachA violation of a legal or moral obligation. will also give the lender a right to claim damages An sum of money ordered by a court to be paid to a person as compensation for loss or injury. for losses suffered as a result. You should think about putting limits on these rights – for example, you have the opportunity to put right any breachA violation of a legal or moral obligation. .

When reviewing representations and warranties Promises or assurances in a contract.requested by a lender, you should check with your legal adviser that each of them can be given in the form requested and get advice on the consequences of any of them being incorrect. For access to a specialist lawyer who can advise you on negotiations with a lender, you can use our Ask a Lawyer service

You can expect to give financial covenantsContractual undertakings from a borrower to a lender about the borrower's financial position. to a lender, especially if your loan is complex or for a sizeable amount.

Financial covenantsContractual undertakings from a borrower to a lender about the borrower's financial position. are undertakingsPromises to do or not do something, commonly contained in a contract. from your companyA private company limited by shares incorporated and registered in England and Wales. with regard to its financial position, such as ensuring that:

1. your companyA private company limited by shares incorporated and registered in England and Wales. 's working capitalThe cash available for a business's day-to-day operations. is not less than a set amount;

2. the ratio of your companyA private company limited by shares incorporated and registered in England and Wales. 's assets to liabilities is not less than a particular number;

3. dividendsPayments in cash by a company to its shareholders by way of distributions of a share of the company's profits. do not exceed a set percentage of profits.

A breachA violation of a legal or moral obligation. of a financial covenantA contractual undertaking from a borrower to a lender about the borrower's financial position. will typically amount to an event of defaultAn event defined in a contract which constitutes a default or breach of the contract and gives the non-defaulting party the right to terminate. Often used in an agreement where a company borrows money from a lender, the occurrence of an event of default will entitle the lender to require immediate repayment in full of the loan. giving the lender the right to demand immediate repayment. You should think about asking the lender for the right to rectify any such default by, for example, you putting more cash into the business.

You should check the financial covenantsContractual undertakings from a borrower to a lender about the borrower's financial position. carefully with your accountant as regards the ability of your companyA private company limited by shares incorporated and registered in England and Wales. to comply on each date when the covenants are tested. You and your accountant should also check the key definitions relevant to these covenants – in the above examples, how working capitalThe cash available for a business's day-to-day operations., assets and liabilities are defined.

Your companyA private company limited by shares incorporated and registered in England and Wales. will give a number of undertakingsPromises to do or not do something, commonly contained in a contract. to the lender in addition to financial covenantsContractual undertakings from a borrower to a lender about the borrower's financial position. (see Q&A 12). These will be both positive and negative undertakingsPromises to do or not do something, commonly contained in a contract..

A positive undertakingA promise to do or not do something, commonly contained in a contract. is an action you have agreed to take such as providing specific information to the lender and taking out particular insurance cover.

A negative undertakingA promise to do or not do something, commonly contained in a contract. is an action you have agreed not to take without the lender's consent, such as incurring capital expenditure of more than a certain amount or issuing new sharesShares in the capital of a company (sometimes also referred to as stock, for example in relation to US companies). Shares in a company give to the holders, known as shareholders, rights in relation to that company such as to vote, to receive dividends and to a return of capital. Holders of shares in a company own that company and the company, not its shareholders, owns the company's assets. .

A breachA violation of a legal or moral obligation. of one of these undertakingsPromises to do or not do something, commonly contained in a contract. could amount to an event of defaultAn event defined in a contract which constitutes a default or breach of the contract and gives the non-defaulting party the right to terminate. Often used in an agreement where a company borrows money from a lender, the occurrence of an event of default will entitle the lender to require immediate repayment in full of the loan. (see Q&A 14) so you should check that the undertakingsPromises to do or not do something, commonly contained in a contract. are reasonable and do not adversely impact on the day to day running of your business.

Yes you should.

If an event of defaultAn event defined in a contract which constitutes a default or breach of the contract and gives the non-defaulting party the right to terminate. Often used in an agreement where a company borrows money from a lender, the occurrence of an event of default will entitle the lender to require immediate repayment in full of the loan. occurs under your loan agreement, your lender will have the right to require you to repay the loan immediately and enforce any securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. .

Typical events of defaultEvents defined in a contract which constitute defaults or breaches of the contract and give the non-defaulting party the right to terminate. Often used in an agreement where a company borrows money from a lender, the occurrence of an event of default will entitle the lender to require immediate repayment in full of the loan. include:

1. your failure to pay interest or make a loan repayment on time;

2. breachA violation of a legal or moral obligation. of a representation and warrantyA promise or assurance in a contract. (see Q&A 11);

3. breachA violation of a legal or moral obligation. of a financial covenantA contractual undertaking from a borrower to a lender about the borrower's financial position. (see Q&A 12).

4. a material adverse change in your companyA private company limited by shares incorporated and registered in England and Wales. 's financial circumstances;

5. an insolvencyThe inability to pay debts as they become due. event in relation to your business;

6. a sale of sharesShares in the capital of a company (sometimes also referred to as stock, for example in relation to US companies). Shares in a company give to the holders, known as shareholders, rights in relation to that company such as to vote, to receive dividends and to a return of capital. Holders of shares in a company own that company and the company, not its shareholders, owns the company's assets. by a key shareholderIn relation to a company limited by shares, means a person whose name has been entered in the register of members of that company as a shareholder in that company. or a change in who controls your companyA private company limited by shares incorporated and registered in England and Wales. either at board A collective name for the directors of a company. The board is usually the primary day-to-day decision-making body of a company.or shareholderIn relation to a company limited by shares, means a person whose name has been entered in the register of members of that company as a shareholder in that company. level; or

7. an event of defaultAn event defined in a contract which constitutes a default or breach of the contract and gives the non-defaulting party the right to terminate. Often used in an agreement where a company borrows money from a lender, the occurrence of an event of default will entitle the lender to require immediate repayment in full of the loan. under another key contract of your business.

Given the consequences for your business and for those who have provided securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. , the events of defaultEvents defined in a contract which constitute defaults or breaches of the contract and give the non-defaulting party the right to terminate. Often used in an agreement where a company borrows money from a lender, the occurrence of an event of default will entitle the lender to require immediate repayment in full of the loan. are of critical importance to you. The wider the events of defaultEvents defined in a contract which constitute defaults or breaches of the contract and give the non-defaulting party the right to terminate. Often used in an agreement where a company borrows money from a lender, the occurrence of an event of default will entitle the lender to require immediate repayment in full of the loan., the more rights a lender will have to demand repayment.

You should discuss the proposed events of defaultEvents defined in a contract which constitute defaults or breaches of the contract and give the non-defaulting party the right to terminate. Often used in an agreement where a company borrows money from a lender, the occurrence of an event of default will entitle the lender to require immediate repayment in full of the loan. with your advisers to ensure:

1. they will not trip you up for something minor;

2. where outside your control, such as a material adverse change in your business caused by market conditions, they are reasonable;

3. there is a grace period for you to put the matter right – for example, you have a period of grace for failing to pay on time before it becomes an event of defaultAn event defined in a contract which constitutes a default or breach of the contract and gives the non-defaulting party the right to terminate. Often used in an agreement where a company borrows money from a lender, the occurrence of an event of default will entitle the lender to require immediate repayment in full of the loan.; and

4. if the event of defaultAn event defined in a contract which constitutes a default or breach of the contract and gives the non-defaulting party the right to terminate. Often used in an agreement where a company borrows money from a lender, the occurrence of an event of default will entitle the lender to require immediate repayment in full of the loan. has been remedied for whatever reason, the lender's right to demand repayment falls away.

You should check early in the process what fees and costs you will have to pay to the lender.

A lender may, depending on the type of loan, charge you some or all of the following:

1. an arrangement fee for making the loan available to you;

2. for some types of loan, a fee on any part of the loan which has not been drawn down by you;

3. legal expenses of the lender in negotiating the loan;

4. a fee and costs if you make a repayment earlier than the agreed repayment date (see Q&A 10) ; and

5. costs incurred following an event of defaultAn event defined in a contract which constitutes a default or breach of the contract and gives the non-defaulting party the right to terminate. Often used in an agreement where a company borrows money from a lender, the occurrence of an event of default will entitle the lender to require immediate repayment in full of the loan..

Some Peer-to-peer platformsInternet-based platforms regulated by the FCA which match lenders with borrowers and are an alternative source of finance to banks. Investors can each lend a small part of an overall loan which encourages multiple lenders to a business. The platforms usually require a positive trading history and will carry out credit checks. Interest can be fixed although in some cases investors can be asked to bid a rate and borrowers can then choose the lowest. Loans through peer-to-peer platforms can range from several thousand to several million pounds. and crowdfunding platformsPlatforms which match companies with share investors or lenders via the internet. There are three forms of funding (crowdfunding) enabled by a crowdfund platform: (1) where every investor or lender becomes a direct shareholder in or lender to the company concerned; (2) where one investor or lender leads the fund-raising, carries out due diligence and negotiates terms, and the other investors or lenders (the crowd) follow; (3) where the investors hold their shares or lenders hold their loans via a nominee company which is operated by the platform. may, in addition to an arrangement fee, charge you a servicing or administration fee and, if there is an auction to lenders, an application fee and premium listing fee to upload a video onto the platform.

You need to establish precisely what fees you have to pay and you will want a specific figure for the lender's legal expenses rather than having this open-ended. These fees and costs will be part of your total borrowing costs which you need to factor(In finance) A financier who provides finance to a business by buying the business's debts under the terms of a factoring agreement. in before deciding to go ahead with the loan.

You will be expected to keep a lender updated throughout the period of a loan so it can keep track of your business.

A lender to your business can expect to receive from you:

1. audited annual accountsAccounts prepared using the company's financial records at the end of the company's financial year. All companies registered in the UK must prepare and file annual accounts at Companies House. and monthly management accounts within agreed timescales;

2. details of any litigation or legal proceedings;

3. written confirmation from you of compliance with the loan where appropriate – for example, compliance with financial covenantsContractual undertakings from a borrower to a lender about the borrower's financial position.; and

4. anything else important to your business.

In relation to financial information, you should check the content and timescales of what you are asked to produce with your finance directorThe directors of a company are the individuals who make up the company's board of directors. Directors may be natural persons or companies, but each company must have at least one director who is a natural person. The board is the main decision-making body of the company. or a suitably qualified accountant.

Most lenders will include in their standard form documents the right, without your consent, to transfer all or part of their loan to whoever they wish. For most lenders this will be non-negotiable.

Although particular lenders may insist on this, you should be aware that if your loan is transferred you may find yourself in a relationship with a lender whom you would not have chosen.

The terms of your loan should not be affected by a transfer of your loan but the relationship you enjoy with a lender to your business is important and the way one lender approaches a loan may differ from another.

You should therefore think about asking a lender for the following:

1. your prior consent before any loan transfer;

2. as an alternative, asking for the right to be notified well in advance of any loan transfer and to have the right without any additional cost either to repay the loan or select another lender; and

3. information on the lender's previous history of transferring loans such as yours so you can assess the risk of this happening in practice.

Most lenders to your business will expect your companyA private company limited by shares incorporated and registered in England and Wales. to give securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. over all current and future assets by signing a document known as a debentureIn relation to a loan, a debenture is security which a borrower will commonly give to a lender over all of its current and future assets. The lender will typically want this security to rank first so that it can take hold of the assets ahead of all other creditors of the borrower if there is a default on the loan..

The debentureIn relation to a loan, a debenture is security which a borrower will commonly give to a lender over all of its current and future assets. The lender will typically want this security to rank first so that it can take hold of the assets ahead of all other creditors of the borrower if there is a default on the loan. will be produced by the lender and will typically include the following terms:

1. specific securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. on assets of value such as land and fixturesThings which have been added to a building or land. Fixtures are permanent or semi-permanent and require money or effort to remove, if they can be removed at all. Examples of fixtures include permanent walls and partitions, in-wall electrical wiring and windows.;

2. general securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. over all other assets, current and future;

3. the lender's ability to appoint someone to take over your companyA private company limited by shares incorporated and registered in England and Wales. 's business and assets if there is a default on the loan; and

4. a prohibition on your companyA private company limited by shares incorporated and registered in England and Wales. being able to give securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. over its assets to anyone else.

Before you sign a debentureIn relation to a loan, a debenture is security which a borrower will commonly give to a lender over all of its current and future assets. The lender will typically want this security to rank first so that it can take hold of the assets ahead of all other creditors of the borrower if there is a default on the loan. or any other securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. for a loan, you should check if any securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. has already been given by your companyA private company limited by shares incorporated and registered in England and Wales. . If so, you will need to discuss with the lender and you will need the consent of the person in whose favour the securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. has been given.

DebenturesIn relation to loans, debentures are security which borrowers will commonly give to lenders over all of their current and future assets. The lenders will typically want the security to rank first so that they can take hold of the assets ahead of all other creditors of the borrowers if there is any default on the loans., and securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. generally, can be lengthy and complex documents. It is suggested you get advice from a legal expert who specialises in this area if required to give securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. for a loan. For access to a specialist lawyer who can advise you on negotiations with a lender, you can use our Ask a Lawyer service

It is likely that a lender will want securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. from some or all of your companyA private company limited by shares incorporated and registered in England and Wales. 's shareholdersIn relation to a company limited by shares, means persons whose names have been entered in the register of members of that company as shareholders in that company. as well as from your companyA private company limited by shares incorporated and registered in England and Wales. . There could be a number of reasons for this, such as:

1. your business is early stage and has little if anything in the way of assets of any value;

2. your business is not yet established enough to give a lender confidence that all payments will be met;

3. your business is established, even profitable, but the nature of the business means that your companyA private company limited by shares incorporated and registered in England and Wales. 's assets do not provide meaningful securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. ; or

4. the lender wants key shareholdersIn relation to a company limited by shares, means persons whose names have been entered in the register of members of that company as shareholders in that company. to stand behind your companyA private company limited by shares incorporated and registered in England and Wales. .

SecurityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. which a lender will want from your companyA private company limited by shares incorporated and registered in England and Wales. 's shareholdersIn relation to a company limited by shares, means persons whose names have been entered in the register of members of that company as shareholders in that company. typically takes the form of:

1. a personal guaranteeWhere an individual promises to provide a payment or some form of benefit in the case of some form of loss occurring. A personal guarantee may be, for example, to pay an amount of an individual's own money to a bank in the event that a company becomes insolvent. that the loan will be repaid; and

2. securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. over their personal assets in case they do not pay when a demand is made on them.

If so, you should strongly recommend that the shareholdersIn relation to a company limited by shares, means persons whose names have been entered in the register of members of that company as shareholders in that company. take personal legal advice. Although they may have no choice if you want the loan, they need to be aware that by giving securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. they are exposing themselves to possible personal liability and to losing their personal assets provided as securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. . This cuts across one of the main benefits of a companyA private company limited by shares incorporated and registered in England and Wales. , which is in most circumstances protecting shareholdersIn relation to a company limited by shares, means persons whose names have been entered in the register of members of that company as shareholders in that company. from personal liability. For access to a specialist lawyer in a few simple steps, you can use our Ask a Lawyer service

In relation to any guarantee(1) In the context of debt, a contract where someone agrees to pay if the debtor cannot pay themselves. (2) In the context of sale of goods, a promise to a customer which is given freely (without charging extra money) that the goods they are buying will meet certain standards, and if they do not the person making the promise will do something to make up for that (eg give a refund, or repair or replace the goods). they are being asked to give, the shareholdersIn relation to a company limited by shares, means persons whose names have been entered in the register of members of that company as shareholders in that company. should check:

1. what they are guaranteeing, bearing in mind that a lender's standard form guarantee(1) In the context of debt, a contract where someone agrees to pay if the debtor cannot pay themselves. (2) In the context of sale of goods, a promise to a customer which is given freely (without charging extra money) that the goods they are buying will meet certain standards, and if they do not the person making the promise will do something to make up for that (eg give a refund, or repair or replace the goods). will typically catch all amounts which your companyA private company limited by shares incorporated and registered in England and Wales. owes to the lender from time to time ie not just the loan;

2. their maximum personal liability, bearing in mind that your companyA private company limited by shares incorporated and registered in England and Wales. will be liable for more than the amount of the loan given interest, fees, costs etc; and

3. whether anyone else has an interest in any personal assets to be provided as securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. (such as the family home).

Although there is no legal requirement for you or the lender to register the securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. at Companies HouseThe registrar of all companies in the UK. Companies House incorporates and dissolves limited companies, registers the information companies are legally required to supply, and makes that information available to the public., in practice any securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. your companyA private company limited by shares incorporated and registered in England and Wales. gives to a lender will need to be registered within the period required by legislationLaws made by the government, usually in the form of Acts of Parliament and regulations. so that it appears on the register of chargesA register kept by Companies House on which it includes details of charges created by companies, including copies of the documents creating the charges and whether the required information was delivered to Companies House in the form and within the timescale required by statute. maintained by Companies HouseThe registrar of all companies in the UK. Companies House incorporates and dissolves limited companies, registers the information companies are legally required to supply, and makes that information available to the public.. This register is open to public inspection.

This is because if the securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. is not registered within the required period there are serious commercial consequences for both you and the lender, in that:

1. a liquidatorA person appointed to wind up the affairs of a company., administratorA person appointed to manage the affairs and property of an insolvent company. or creditorA person or business to whom money is owed. of your companyA private company limited by shares incorporated and registered in England and Wales. will be able to ignore the securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. , which is very serious for the lender;

2. the debt owed by your companyA private company limited by shares incorporated and registered in England and Wales. to the lender will become immediately payable and there will be additional liabilities for your companyA private company limited by shares incorporated and registered in England and Wales. under the loan agreement, which is very serious for you and your business; and

3. any personal securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. given by your companyA private company limited by shares incorporated and registered in England and Wales. 's shareholdersIn relation to a company limited by shares, means persons whose names have been entered in the register of members of that company as shareholders in that company. will become enforceable, which is very serious for them.

In practice, it is therefore in both your and the lender's interests to provide particulars of the securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. to Companies HouseThe registrar of all companies in the UK. Companies House incorporates and dissolves limited companies, registers the information companies are legally required to supply, and makes that information available to the public. within the time and in the manner specified by legislationLaws made by the government, usually in the form of Acts of Parliament and regulations..

The requirements which you will need to meet to register securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. given to a lender are detailed and need to be followed precisely, otherwise the registration will not succeed.

To ensure the securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. is registered with Companies HouseThe registrar of all companies in the UK. Companies House incorporates and dissolves limited companies, registers the information companies are legally required to supply, and makes that information available to the public. and appears on the register of chargesA register kept by Companies House on which it includes details of charges created by companies, including copies of the documents creating the charges and whether the required information was delivered to Companies House in the form and within the timescale required by statute. open to the public, you must deliver to Companies HouseThe registrar of all companies in the UK. Companies House incorporates and dissolves limited companies, registers the information companies are legally required to supply, and makes that information available to the public. within 21 days of the securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. having been given:

1. a statement of particulars on the appropriate CompaniesPrivate companies limited by shares incorporated and registered in England and Wales. Form (which for your companyA private company limited by shares incorporated and registered in England and Wales. is likely to be Form MR01) which requires detailed information from you and must be completed and signed correctly;

2. a certified copyA copy of an original document which has on it written confirmation that it is a true copy of the original. of the document which creates the securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. ; and

3. the appropriate fee.

Companies HouseThe registrar of all companies in the UK. Companies House incorporates and dissolves limited companies, registers the information companies are legally required to supply, and makes that information available to the public. will compare the information set out in the statement of particulars with the accompanying copy of the securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. document. If it is accurate, and if all is otherwise in order, Companies HouseThe registrar of all companies in the UK. Companies House incorporates and dissolves limited companies, registers the information companies are legally required to supply, and makes that information available to the public. must:

1. allocate a 12-digit unique reference code to the securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. and place a note on the register of chargesA register kept by Companies House on which it includes details of charges created by companies, including copies of the documents creating the charges and whether the required information was delivered to Companies House in the form and within the timescale required by statute. recording this;

2. issue to you a certificate of registration of the charge; and

3. include the statement of particulars and certified copyA copy of an original document which has on it written confirmation that it is a true copy of the original. of the securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. document on the register of chargesA register kept by Companies House on which it includes details of charges created by companies, including copies of the documents creating the charges and whether the required information was delivered to Companies House in the form and within the timescale required by statute..

It is suggested that if you are dealing with registration, you should ask a legal adviser to do this on your behalf. For access to a specialist lawyer in a few simple steps, you can use our Ask a Lawyer service.

You should also think about whether any additional filings are required – for example, a legal mortgageA loan (usually to an individual or individuals) to purchase a property, which is secured on the property. over registered land must be registered at the Land RegistryThe statutory body which runs the official Land Register, on which the registration of all land is stored. You should also ask your legal adviser about this.

Given the serious consequences for a lender of securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. not being registered at Companies HouseThe registrar of all companies in the UK. Companies House incorporates and dissolves limited companies, registers the information companies are legally required to supply, and makes that information available to the public. (see Q&A 21), the lender may want to register the securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. . If so you should ask the lender to keep you informed and confirm when this has been done.

You must make available for public inspection the document which creates the securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. and any document amending the securityAlso known as a debenture, charge or mortgage, security over an asset or assets (such as cash, debts, real estate or equipment) is given by a borrower (and sometimes a third party such as a shareholder of the borrower) to a lender in case the borrower fails to make a payment due. Security is also used to refer to a personal guarantee of a borrower's payment obligations to a lender, typically given again by a shareholder and sometimes secured over the shareholder's personal assets. In the event of a borrower's failure to make a payment due to a lender, the lender will have the right to sell any asset secured or call in the guarantee. . The document must be kept either at your companyA private company limited by shares incorporated and registered in England and Wales. 's registered officeAn address a company is required to have, which must be in the same UK jurisdiction in which the company is registered, to which communications and notices may be sent. or another place which you have notified to Companies HouseThe registrar of all companies in the UK. Companies House incorporates and dissolves limited companies, registers the information companies are legally required to supply, and makes that information available to the public. and is on your public register.

The documents must be available for inspection by any member or creditorA person or business to whom money is owed. of your companyA private company limited by shares incorporated and registered in England and Wales. free of charge and any other person on payment of a prescribed fee.

It is a criminal offence not to comply with these requirements.