What’s a debenture (and how do they work)?

It’s an agreement you sign that gives us a little extra security

Mateusz Bijakowski avatar
Written by Mateusz Bijakowski
Updated over a week ago

To receive CBILS or RLS funds you may be required to sign a debenture. This means that if you default on your loan we’ll be able to claim the money from the assets your business owns, like laptops, property or machinery. This does not include personal assets, like your house or car.

Is it the same as a personal guarantee?

No, with a personal guarantee, someone - normally a director or shareholder of the business - acts as a ‘guarantor’ to the loan. If the business is unable to repay, then they have to.

With a debenture, the business is liable for the money. So if you're unable to repay, we may only claim on business assets, such as computers and machinery.

Why do I need to give one?

The debenture makes up part of our offer, just like the amount we lend. When you apply for a loan, we assess your business to work out how much to lend, at what price, and what type of security (like a debenture or a guarantee) we need to be able to make an offer.

What are ‘fixed’ and ‘floating’ charges?

There’s more detail in this guide to debentures. But briefly, fixed charges give us priority over specific assets (like property or equipment). Floating charges generally hover across all the business’ assets (including stock).

Not sure about anything?

It’s a good idea to get legal advice before you sign a debenture or personal guarantee.

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