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A floating charge is a form of security used in business lending that covers a class of assets which fluctuates in the ordinary course of business — stock, debtors, cash in bank, or similar. Unlike a fixed charge, it does not attach to specific identified items; instead it "floats" above the pool of assets until a trigger event, such as default or insolvency, causes it to crystallise into a fixed charge over whatever assets remain at that moment.
- What it covers
- A changing class of assets — typically stock, receivables, or circulating cash.
- When it fixes
- On a crystallisation event: default, appointment of a receiver, or insolvency.
- Where it is registered
- At Companies House, as part of a debenture or charge.
- Priority on insolvency
- Fixed charges rank ahead of floating charges; prescribed expenses and preferential creditors also rank above a floating charge holder.
Fixed versus floating charge
A fixed charge attaches to specific assets — property, machinery, intellectual property — which the company cannot freely dispose of without the lender's consent. A floating charge allows the company to deal with its assets in the ordinary course of business (selling stock, collecting debts) without needing the lender's permission for every transaction. Many debentures combine both: fixed charges over property and key assets, floating charges over the remaining estate.
Crystallisation
When a crystallisation event occurs, the floating charge converts to a fixed charge over the assets the company holds at that moment. From that point the company can no longer freely deal with those assets. Common triggers include a demand by the lender following default, the appointment of an administrator or receiver, or the commencement of liquidation.
Floating charges and Credicorp
Credicorp's short-term business lending to UK limited companies and LLPs is unsecured — it takes no fixed charge, no floating charge, and no personal guarantee. The borrowing is an obligation of the company alone. Credicorp is an independent UK lender (Company No. 16093826; ICO ZC157682).
See also
- Debenture — the document that typically contains a floating charge.
- Collateral — the assets over which a charge is taken.
- Secured loan — lending backed by a fixed or floating charge.
- Unsecured credit — lending with no charge.
Short-term business credit carries a high annualised cost. Borrow only what you need, for the shortest term required. If repayment becomes difficult, contact us early at /help/. For exact pricing, see /ai.md and /llms-full.txt.