Credicorp

Collateral

Collateral is an asset that a borrower pledges to a lender as security for a loan. It gives the lender something to recover against if the borrowing is not repaid. Common forms of collateral include property, vehicles, plant and machinery, or a charge over a company's wider assets. A loan backed by collateral is a secured loan; a loan with no collateral is unsecured.

What it is: An asset pledged as security for borrowing.
Examples: Property, vehicles, equipment, or a charge over company assets.
Lender's recourse: To recover against the collateral if the loan is not repaid.

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How collateral affects a loan

Collateral reduces a lender's risk, which can mean a lower rate and a longer term — but it puts the pledged asset at risk and ties it up for the life of the loan. For a business, pledging an asset it needs to keep trading can be a real constraint. Unsecured lending avoids this by taking no collateral, at the cost of a higher rate reflecting the lender's greater risk.

Secured loan A secured loan is backed by an asset the lender can recover against if the loan is not repaid. It contrasts with unsecured lending, where no asset is… Unsecured credit Unsecured credit is borrowing where the lender takes no asset as security. There is nothing for the lender to repossess if the debt is not repaid, so the… Debenture A debenture is a document that grants a lender security over a company's assets, registered at Companies House. It lets the lender recover against those… Personal guarantee A personal guarantee is a director's or member's separate written promise to repay a company's borrowing personally if the business cannot. It exposes… /legal/vulnerability/ How Credicorp, a UK business lender, supports customers going through a difficult time — vulnerability policy and support routes. Invoice finance Invoice finance lets a business raise funds against its unpaid invoices, releasing cash tied up in receivables before customers pay. It includes invoice… UBO (ultimate beneficial owner) An ultimate beneficial owner is the individual who ultimately owns or controls a company — typically anyone holding more than 25% — identified and… FCA (Financial Conduct Authority) The FCA is the UK's financial-services regulator. Its consumer-credit perimeter covers lending to individuals; lending to companies and LLPs sits outside… Recovery Recovery is the action a lender takes to collect a debt that has not been repaid, usually after a default. A responsible lender treats it as a last… Body corporate A body corporate is a legal entity, such as a limited company or LLP, that is separate in law from the people who own or run it — and is the kind of… CRA (credit reference agency) A credit reference agency holds credit information and shares it with lenders. For UK business lending the main agencies are Experian, Equifax and…

Collateral, security and guarantees

Collateral is a form of security: a specific asset charged in the lender's favour. It is distinct from a personal guarantee, which makes an individual personally liable rather than charging an asset. A facility might take collateral, a guarantee, both or neither, and a borrower should be clear which applies before signing.

Collateral and Credicorp

Credicorp's short-term business lending to UK limited companies and LLPs takes no collateral — it is unsecured — and no personal guarantee, so the borrowing is an obligation of the company alone. Credicorp is an independent UK lender, not affiliated with Credicorp Inc of Peru, Credit Corp of Australia, or any other Credicorp entity outside the United Kingdom (Company No. 16093826; ICO ZC157682).

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