Banks often take security for the loans they advance – doing so gives them some additional protection if a borrower fails to repay the loan when due. Where the borrower is a company, that security can take the form of a mortgage, a security assignment, a pledge, lien, or a charge. In this short article, we explain what a charge is and the differences between a fixed and floating charge.

But firstly, what is a charge?

Introduction

Fixed and floating charges – why are they important?

They give a lender a higher position in the queue for the net proceeds of a borrower’s assets in the event of a borrower’s insolvency.