Fixed and Floating Charges
Author: John A Waller, Director December 23rd,2021.
If a limited company borrows from a financial institution, the lender needs security for the loan.
Therefore, protect the lender by allowing it to take back the asset and sell the assets, which act as security should the borrower default on payment. And enter liquidation.
However, the disorder often comes with the two types of charge, fixed and floating, used to provide lenders security over the assets of a limited company.
A fixed charge applies to debts secured against a considerable and distinguishable physical asset, examples being property, land, vehicles, and plant and machinery. In the event the company cannot comply with the terms of the financing agreement, the lender as a creditor will ta