Fixed charge

Q: What's the difference between a fixed and a floating charge?

A fixed charge is over a specific named asset you can't sell without consent, and it ranks first on insolvency. A floating charge sits over a changing pool of assets like stock and debtors, which you trade freely, and ranks lower.

2 min read

Specific assetWhat it covers

First in lineRepayment priority

In plain terms

A fixed charge attaches security to one particular asset that the lender can name — a freehold property, a piece of plant, a vehicle, or a specific machine. While the charge is in place, the business can't sell or refinance that asset without the lender's agreement, because the asset is effectively earmarked to repay the debt.

It's the firmest form of security. Because the asset is pinned down, a fixed charge holder sits at the front of the queue if the business fails. That priority is exactly why lenders favour fixed charges, and why they typically reserve them for assets that hold their value.

Fixed charge versus floating charge

The two charge types secure assets in fundamentally different ways:

	Fixed charge	Floating charge
Asset type	Specific, named (property, machinery)	Changing pool (stock, debtors)
Can you sell it freely?	No — needs consent	Yes, in normal trading
Priority on insolvency	Highest	Lower — paid after preferential creditors

A floating charge hovers over assets that come and go; a fixed charge clamps onto something specific. Many debentures combine both to cover the whole business.

Why it matters to your business

If you grant a fixed charge, you give the lender real control over a key asset. You can keep using it, but you can't sell, refinance or re-mortgage it without their sign-off — which can limit your flexibility if circumstances change. In exchange, the strength of the security often unlocks larger advances or a keener rate.

It also shapes what's left for everyone else. Because a fixed charge ranks first, granting one over your most valuable asset reduces what other creditors could recover, which can make subsequent unsecured borrowing harder. This is a key reason some directors prefer unsecured finance for short-term needs — Credicorp lends to the company without taking a charge over specific assets or a personal guarantee.

Where you'll see fixed charges

Fixed charges turn up most often in:

Commercial mortgages — a charge over the trading premises.
Asset finance — security over the specific equipment or vehicle being funded.
Secured term loans — a charge over a named, durable asset.

They're registered at Companies House, so anyone running due diligence on your business can see them. A clean asset register, free of unnecessary charges, keeps your future borrowing options open — useful context when you read a lender's security requirements.

Frequently asked questions

What's the difference between a fixed and a floating charge?

A fixed charge is over a specific named asset you can't sell without consent, and it ranks first on insolvency. A floating charge sits over a changing pool of assets like stock and debtors, which you trade freely, and ranks lower.

Does Credicorp take a fixed charge over my assets?

Credicorp provides short-term working-capital finance to UK limited companies without taking a charge over specific assets and without a personal guarantee. The lending is to the company. Always check any lender's security terms before signing.

Can I sell an asset that has a fixed charge on it?

Not freely. While a fixed charge is in place you need the lender's consent to sell, refinance or re-mortgage the asset, because it's earmarked to repay the debt. The charge is usually released once the loan is repaid.