When you apply for any form of finance usually the lender will want some form of security or collateral against that debt. This ensures that their risk is minimised and should you default on the loan they have a course of action available to them to recover the money. Ideally lenders would like security in the form of capital assets (often property) as they are easy to sell and so they can quickly recover their funds.

In many cases however no such collateral exists. The banks and other lending institutions recognise this problem and allow other forms of security to guarantee the debt.

The main forms of security that you may be asked to provide should you not have any traditional collateral are:

• Personal Guarantee
• Debentures
• Fixed Charges
• Performance Bonds

By giving businesses alternative ways to offer security the lenders are a) making more money and b) making much needed funding accessible to businesses without sufficient security. The pricing of debt and level of debt available varies according to the type and value of the security.