Floating Charge

How floating charge works

It can cover assets such as stock or receivables while the business continues trading. Crystallisation and enforcement depend on the document and law, and statutory priorities can affect the amount recovered in insolvency.

Practical UK business example

A trading company holds stock that is continually bought and sold. A lender’s floating charge can cover the changing pool rather than requiring a separate charge over each item.

Illustrative example only; not a finance quotation or a client case study.

Why it matters

It may support borrowing where security over only fixed assets is insufficient. The business still needs to understand the restrictions and default events in its finance documents.

Limitations and common misconceptions

A floating charge does not give a lender an unconditional right to all proceeds ahead of every other creditor. Insolvency rules, prior security and statutory claims can alter recoveries.

Discuss business borrowing to discuss how the structure relates to your business.