2 min read
Definition
A floating charge is a form of security that hovers over a class of assets that change in the ordinary course of business, allowing the company to buy and sell them freely until a trigger event — default or insolvency — causes the charge to crystallise into a fixed charge over the assets then held.
In plain terms
It lets a lender take security over your stock and receivables without freezing your ability to trade them — until things go wrong, when it clamps down.
Why it matters for your company
Floating charges rank behind fixed charges and certain preferential creditors in an insolvency. They're common in a debenture. See fixed charge.
Related reading
Debenture (as security)
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Fixed Charge: Asset Security in UK Business Lending
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Secured vs unsecured business loans
A secured business loan is backed by an asset the lender can claim if it isn't repaid; an unsecured loan…
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Crystallisation (floating charge)
Crystallisation is the moment a floating charge stops hovering and clamps onto whatever assets exist —…
Read →Funding for UK limited companies
Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.