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National Debtline

Advice you can trust

Business borrowing

Different rules can apply to money that you borrow for your business, compared to money you borrow personally. It is important to understand how this may affect you and your business.

Secured loans and overdrafts

  • Secured debts are normally mortgages, loans and overdrafts, secured on your assets.
  • Your assets can be at risk if you do not pay your secured debts.
  • If your lender takes court action for a secured debt, you do not have the same rights as an unsecured borrower.

Unsecured business debt

  • Unsecured business debts, such as overdrafts and loans can normally be treated in the same way as personal credit debts, unless you have unsecured business debt with the same bank.
  • If you cannot move your business account, you may need to treat your unsecured business debt as a priority debt.

Buy-to-let properties

  • If you have a buy-to-let property, you would normally need to be registered as self-employed.
  • If your buy-to-let property has a mortgage, the lender may have different powers to take action if you do not pay.
  • This depends on the agreement you have signed.

All monies charge

  • An 'all monies charge' is a debt with a bank that means all the money you owe them now, and anything else you borrow from them in the future, is secured.
  • If you fall behind with payments your assets could be at risk.
  • It can also be more difficult to negotiate with the bank compared to a personal credit debt.

Business banking

  • To help keep track of your business income and outgoings, it is important to have a separate business account.
  • When you open a business account the bank will check your credit reference file.
  • They will do this even if you are asking for an account for a limited company.
  • Some banks offer a basic business account which does not include any credit facilities such as an overdraft.
  • If you have more than one account with the same bank, it has the right to take money from any accounts with them in your name, to pay arrears.
  • They cannot do this if your business and personal accounts are with different banks.