How lenders assess group charges
Lenders routinely search Companies House for charges registered against the company they are lending to and, increasingly, against associated companies and group entities. A charge registered by another lender over an associated company can indicate that the group already has secured lending exposure, and may restrict a new lender's ability to take first-ranking security.
The type of charge matters. A fixed charge over specific assets limits only those assets as security. A floating charge (debenture) covers all the company's assets and, when crystallised, takes priority over most other creditors. Where a debenture already exists over an associated company, new lenders may be concerned about cross-group guarantees or asset transfers affecting their security position.
When associated company charges create problems
The most common scenario where an associated company charge creates difficulty is when a new lender wishes to take a debenture over the borrowing company and discovers that the same director or parent entity has already given a debenture to another lender over an associated entity. Lenders will need to understand the group structure fully and may require confirmation that there are no cross-default clauses or guarantees that could trigger a default across the group.
Lenders also check whether charges have been satisfied. An outstanding charge from a now-dissolved lender or a charge that has not been formally discharged can cause administrative complications, even if the underlying debt has been repaid.
- Lenders will search Companies House for all associated companies when assessing group risk
- Outstanding charges from a parent or sibling company may indicate existing security claims
- Cross-group guarantees can expose the borrowing entity to liabilities of associated companies
- Unsatisfied charges from repaid lenders should be formally discharged (MR04 form) to keep the record clean
- Inter-company loans between group entities are assessed as debt and may affect serviceability calculations
Steps to improve your position
Ensure all charges that have been fully repaid are formally discharged at Companies House using the MR04 form. Prepare a clear group structure chart showing the relationship between all associated entities, their respective charges, and whether those charges are live. Lenders who understand a group structure upfront are more likely to proceed than those who discover it mid-process.
Frequently Asked Questions
Does a charge on a parent company affect a subsidiary's ability to borrow?
Potentially, yes. If the parent has given a debenture to a lender, that lender may have a charge over all assets including shares in subsidiaries. A new lender to the subsidiary will want to understand whether the parent's debenture holder could crystallise their charge over the subsidiary's assets.
How do I remove a satisfied charge from Companies House?
File form MR04 (Memorandum of Satisfaction or Release) at Companies House. The lender must countersign the form, confirming the charge has been satisfied. This removes the live status of the charge from the register and eliminates confusion for future lenders.
Can I get invoice finance with a debenture on an associated company?
Possibly. Some invoice finance providers take a fixed charge over the book debts rather than a full debenture. They will conduct a priority search to confirm no existing charge has priority over the book debts. The answer depends on the specific structure of the existing charges.