What is the difference between secured and

2 min read

Paid firstSecured

Rank behindUnsecured

Recovery orderWhy it matters

How they rank

If a company enters insolvency, a strict order applies. Secured creditors with a fixed charge are paid first from that asset; then preferential creditors; then floating-charge holders; then unsecured creditors — suppliers, most lenders without security, and others — who share whatever is left, often receiving pennies in the pound.

What this means for your company

The ranking explains lender behaviour: taking security moves them up the queue. For you as a director, it's why suppliers assess your credit before offering trade credit — they're unsecured and want to know the risk. Fewer charges on your record keeps your business looking less encumbered to the unsecured creditors you rely on.

What it means for you

Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.

Frequently asked questions

Who gets paid first if a company fails?

Secured creditors with a fixed charge are paid first from the charged asset, followed by preferential creditors, then floating-charge holders, then unsecured creditors. Shareholders rank last. The order is set by insolvency law.

Are most lenders secured or unsecured?

It varies. Lenders who take a charge are secured and rank higher; those lending unsecured rank with suppliers. Credicorp's core lending is unsecured with no charge, which keeps your assets free of security.