Mortgagee	Number of charges registered
NATIONAL WESTMINSTER BANK PLC	164,740
BARCLAYS BANK PLC	150,744
HSBC BANK PLC	94,017
LLOYDS TSB BANK PLC	81,739
THE ROYAL BANK OF SCOTLAND PLC	77,968
MIDLAND BANK PLC	38,585
LLOYDS BANK PLC	35,166
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND	35,056
SVENSKA HANDELSBANKEN AB (PUBL)	17,496
CLYDESDALE BANK PLC	17,271
THE TRUSTEE, LLOYD'S, THE AGENT, ALL POLICY HOLDERS AND CERTAIN OTHER PERSONS OR BODIES	15,111
CLYDESDALE BANK PUBLIC LIMITED COMPANY	13,979
AIB GROUP (UK) PLC	12,920
LLOYDS TSB COMMERCIAL FINANCE LIMITED	12,241
NATIONWIDE BUILDING SOCIETY	10,931
BANK OF SCOTLAND PLC	10,211
CAPITAL HOME LOANS LIMITED	8,745
THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND	8,710
PARAGON MORTGAGES LIMITED	8,704
YORKSHIRE BANK PLC	7,904

So the first thing to note is that there are some bank brands in there that don't exist anymore such as Midland Bank. Commercial mortgages are no different to residential mortgages and may have a term of 20+ years. The mortgage hasn't stopped simply because Midland ceased to exist as a brand! The Midland brand was phased out in 1999 and is now part of HSBC. We can remove the Lloyds entry where are multiple parties are involved in the charge. There are also some companies in there traditionally associated with residential mortgages. This may be because of a Buy-to-let portfolio through a limited company. We also need to clean-up some entries eg Bank of Scotland where The Governor and Company of the Bank of Scotland became Bank of Scotland plc on 17 September 2007. In 1995 Lloyds bank merged with the Trustee Savings Bank and traded as Lloyds TSB Bank plc between 1999 and 2013 so we'll merge those entries. We will however treat LLOYDS TSB COMMERCIAL FINANCE LIMITED as a separate entity. National Westminster Bank is a trading name. It is part of the Royal Bank of Scotland so is not a PLC in it's own right anymore. As it trades independently under that brand, we will still include it in the results in it's own right.

OK. Here's a cleaned up table:

Bank	Number of charges (loans)	% of market
NATIONAL WESTMINSTER BANK PLC	164,740	20.41%
BARCLAYS BANK PLC	150,744	18.68%
HSBC BANK PLC	132,602	16.43%
LLOYDS BANK PLC	116,905	14.48%
THE ROYAL BANK OF SCOTLAND PLC	77,968	9.66%
BANK OF SCOTLAND PLC	45,267	5.61%
CLYDESDALE BANK PLC	31,250	3.87%
SVENSKA HANDELSBANKEN AB (PUBL)	17,496	2.17%
AIB GROUP (UK) PLC	12,920	1.60%
LLOYDS TSB COMMERCIAL FINANCE LIMITED	12,241	1.52%
NATIONWIDE BUILDING SOCIETY	10,931	1.35%
CAPITAL HOME LOANS LIMITED	8,745	1.08%
THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND	8,710	1.08%
PARAGON MORTGAGES LIMITED	8,704	1.08%
YORKSHIRE BANK PLC	7,904	0.98%

This is a classic Pareto example. The top 4 companies account for 70% of the mortgage charges!

Right let's start drilling down into the data. Commercial charges and loans can seem a complex and bewildering area to the outsider. Debentures, fixed charges, floating charges.....the terminology is very different to buying a house where it's a mortgage. For loans, we are used to the idea of secured or unsecured loans. The statistics above predominantly relate to secured loans. In order for an entry to be lodged with Companies House, a charge is created which means there's an entry recording the company as a creditor and that usually means it's secured.

So let's consider a mortgage on your home. The bank may own your home in reality but you have use of it in return you pay them interest on the outstanding debt. Your mortgage company has a charge on the property and it will be recorded at the Land Registy. In business exactly the same can happen when you buy an office, warehouse etc with a commercial mortgage and the bank lodges a charge on it which is recorded against the company and against the property. This kind of property is fixed in the same place. However your business might be a trucking company, an airline or something similar where the assets you want are expensive but also very moveable. These would be fixed charges against a thing of value so an aircraft can effectively be mortgaged. This would be recorded as a fixed charge.

Now if your business is shifting things, you may have lot of money tied up in stock. It's possible to get a commercial loan secured against your stock. Now if you're business is doing well then your stock is constantly being sold so the specific items in your stock are constantly changing. If the loan was secured against the stock, it won't be the exact same stock over time - the specific stock will be changing. Just like a mortgaged house that you're living in, you have use of the stock. If you default on your loan then the bank owns your stock. Say you were an oil company, the bank might secure the loan against the oil in an oil storage facility. The market price for oil fluctates so the bank will hedge this in your loan - on other words the interest rate will be higher than for an asset such as property. These types of loans are called floating charges since the specific assets which the loan is secured against, are "floating". If the loan was secured against the stock, it won't be the exact same stock over time - the specific stock will be changing. Just like a mortgaged house that you're living in, you have use of the stock. If you default on your loan then the bank owns your stock. Say you were an oil company, the bank might secure the loan against the oil in an oil storage facility. The market price for oil fluctates so the bank will hedge this in your loan - on other words the interest rate will be higher than for an asset such as property. These types of loans are call floating charges since the specific assets which the loan is secured against, are "floating".

So how are all these registered charges at companies house split?

The next table shows all the different type of charges lodged with Companies House. This includes charges from a wide range of creditors - not just banks. We'll start simplifying it later - it does however show the mind boggling array of ways available to create liquidity.

LEGAL CHARGE	279256
DEBENTURE	272307
LEGAL MORTGAGE	98383
MORTGAGE	64384
STANDARD SECURITY	44766
RENT DEPOSIT DEED	43911
MORTGAGE DEBENTURE	31012
MORTGAGE OR CHARGE	25084
FLOATING CHARGE	24074
MORTGAGE DEED	18511
ALL ASSETS DEBENTURE	15824
BOND & FLOATING CHARGE	15232
CHARGE	14704
FIXED AND FLOATING CHARGE	14480
GUARANTEE & DEBENTURE	13150
DEED OF CHARGE	8657
CHARGE OF DEPOSIT	5733
DEBENTURE DEED	5423
DEED OF CHARGE OVER CREDIT BALANCES	5054
SINGLE DEBENTURE	4827
CHATTEL MORTGAGE	3654
AN OMNIBUS GUARANTEE AND SET-OFF AGREEMENT	3254
DEED OF ASSIGNMENT	3175
SECURITY AGREEMENT	2963
THIRD PARTY LEGAL CHARGE	2757
FIXED CHARGE ON PURCHASED DEBTS WHICH FAIL TO VEST	2463
DEED OF LEGAL MORTGAGE	2417
GUARANTEE AND DEBENTURE	2356
FIXED & FLOATING CHARGE	2343
COMPOSITE GUARANTEE AND DEBENTURE	2242
LEGAL AND GENERAL CHARGE	2050
LEGAL ASSIGNMENT	1957
DEPOSIT AGREEMENT TO SECURE OWN LIABILITIES	1871
SOLICITORS LETTER OF UNDERTAKING	1777
CHATTELS MORTGAGE	1705
CHARGE OVER CREDIT BALANCES	1704
DEED OF LEGAL CHARGE	1691
SUPPLEMENTAL DEED	1639
ASSIGNMENT	1630
CHARGE DEED	1578
RENT SECURITY DEPOSIT DEED	1489
FLOATING CHARGE (ALL ASSETS)	1339
DEPOSIT AGREEMENT	1271
SECURITY ASSIGNMENT	1269
DEED OF RENTAL ASSIGNMENT	1266
FIXED CHARGE ON NON-VESTING DEBTS AND FLOATING CHARGE	1246
CHARGE AND DEED OF ASSIGNMENT	1226
DEED OF DEPOSIT	1209
CHARGE OVER SHARES	1207
FIXED CHARGE	1119
DEED OF RENT DEPOSIT	1093
LEASE	1055
LEGAL CHARGE OF LICENSED PREMISES	1044
DEED OF ADMISSION TO AN OMNIBUS GUARANTEE AND SET-OFF AGREEMENT	1038
AIRCRAFT MORTGAGE	1017
ASSIGNMENT OF RENTAL INCOME	992
SUPPLEMENTAL DEBENTURE	970
RENT DEPOSIT AGREEMENT	968
SHARE CHARGE	926
DEED	918
DEED OF COVENANT	898
MEMORANDUM OF DEPOSIT	885
FURTHER CHARGE	883
DEED OF SECURITY ASSIGNMENT AND CHARGE	879
DEPOSIT DEED	878
LEGAL MORTGAGE (OWN ACCOUNT)	855
LEGAL CHARGE OVER LICENSED PREMISES	806
FIXED AND FLOATING SECURITY DOCUMENT	787
TRUST DEED	773
LLOYD'S PREMIUM TRUST DEED (GENERAL BUSINESS)	773
MARINE MORTGAGE	766
ASSIGNATION OF RENTS	757
SUPPLEMENTAL LEGAL CHARGE	741
COMPOSITE DEBENTURE	739
AGREEMENT	731
DEED OF RENTAL DEPOSIT	679
DEED OF ACCESSION	662
DEED OF ASSIGNMENT OF RENTAL INCOME	661
ASSIGNATION IN SECURITY	587
MEMO OF DEPOSIT	580
OMNIBUS GUARANTEE AND SET-OFF AGREEMENT	574
SECURITY DEED	555
LLOYDS PREMIUM TRUST DEED (GENERAL BUSINESS) (THE TRUST DEED)	547
SECOND LEGAL CHARGE	537
SUB-CHARGE	537
SUPPLEMENTAL CHATTEL MORTGAGE	528

Pareto is at work here as well. Legal Charges and Debentures form over 50% of the registered charges.

Some of these are not really commercial loans or mortgages. For example a Rent Depsit Deed is a way for the landlord to make sure he gets paid if the company goes into administration. Similarly many Debentures are ways for creditors such as company Directors to be repaid any loans they have made to the company in the event of the company going into administration.

Standard Security is the method used in Scotland for creating a charge against a fixed asset. 41,841 out of the 44,766 Standard Security charges are against Scottish companies - the rest are companies from elsewhere in the British Isles that presumably have assets in Scotland.

Nat West bank had the largest number of registered charges, so here's the breakdown for Nat West.

LEGAL CHARGE	49761
DEBENTURE	43038
LEGAL MORTGAGE	28137
MORTGAGE DEBENTURE	20198
CHARGE OF DEPOSIT	4064
CHARGE OVER CREDIT BALANCES	1484
MORTGAGE	1150
THIRD PARTY LEGAL CHARGE	1038
LEGAL CHARGE OF LICENSED PREMISES	750
LEGAL CHARGE OVER LICENSED PREMISES	624
CHARGE	444
STANDARD SECURITY	406
FLOATING CHARGE	191
SUB-CHARGE	183
BOND & FLOATING CHARGE	123
CHARGE OF AGREEMENT FOR LEASE	115
CHARGE OVER BOOK DEBTS	100
CONFIRMATORY CHARGE	93
ASSIGNMENT OF LIFE POLICY	90
SUB-MORTGAGE	90
MEMORANDUM OF DEPOSIT	89
CHARGE OVER CONTRACT	67
DEED OF COVENANT	64
CHARGE OF SECURITIES (UK)	60
MEMO OF DEPOSIT	56
CHATTEL MORTGAGE	55
DIRECT AND THIRD PARTY LEGAL CHARGE (TRUSTEE AND BENEFICIARY)	48
THIRD PARTY CHARGE OF DEPOSIT	43
SHIPS MORTGAGE	42
THIRD PARTY CHARGE OF DEBT	36
DIRECT AND THIRD PARTY LEGAL CHARGE	35
MARINE DEED OF COVENANT	35
CHARGE OF SECURITIES	35
LEGAL CHARGE OF LICENCED PREMISES	28
DEED OF CHARGE OVER CREDIT BALANCES	28
DEED OF ASSIGNMENT	27
FIXED CHARGE ON BOOK DEBTS AND OTHER DEBTS	26
SUPPLEMENTAL CHARGE	22
DEED OF COVENANT SUPPLEMENTAL TO THE MORTGAGE	22
SECURITY DEED	22
ASSIGNMENT OF LIFE POLICIES	22
SUB CHARGE	19
STATUTORY SHIP'S MORTGAGE TO SECURE AN ACCOUNT CURRENT	18
CHARGE OF BUILDING LICENCE	18
THIRD PARTY CHARGE	18
KEYMAN INSURANCE ASSIGNMENT	17
DEED OF CHARGE	17
MORTGAGE DEED	17
DEBENTURE	17
GUARANTEE & DEBENTURE	16
SUB MORTGAGE DEED	15
SUB-CHARGE OF A MORTGAGE	14
SUPPLEMENTAL DEBENTURE	13
THIRD PARTY LEGAL CHARGE OF LICENSED PREMISES	13
DEED OF DEBENTURE	13
CHARGE OVER A BUILDING AGREEMENT	13
ASSIGNMENT	12
CHARGE OVER DEPOSIT	12
CHARGE AND ASSIGNMENT BY WAY OF SECURITY	12
CHARGE OVER ACCOUNTS	12
FLOATING CHARGE	12
RENT DEPOSIT DEED	11
MEMO. OF DEPOSIT	11
CHARGE OVER CREDIT BALANCES.	11
CHARGE OF EQUIPMENT AND LEASES/HP AGREEMENTS	11
FIXED AND FLOATING CHARGE	11
STATUTORY SHIP'S MORTGAGE	10
COMPOSITE GUARANTEE AND MORTGAGE DEBENTURE	10
CHARGE	10
SECURITY AGREEMENT	9
CHARGE ON DEPOSIT	9
CHARGE LEGAL CHARGE	9
COMPOSITE GUARANTEE AND DEBENTURE	9
DEED OF VARIATION SUPPLEMENTAL TO A LEGAL MORTGAGE	9
SUPPLEMENTAL DEED OF FIXED CHARGE	9
MORTGAGE OR CHARGE	8
ASSIGNMENT OF RENTAL INCOME	8
CHARGE OF DEBT	8
MORTGAGE TO SECURE AN ACCOUNT CURRENT	8
GUARANTEE AND DEBENTURE	8
LEGAL MORTGAGE & FLOATING CHARGE	8
ASSIGNMENT AND CHARGE	7
ASSIGNMENT BY WAY OF SECURITY	7
CHARGE SUPPLEMENTAL TO A MORTGAGE DEBENTURE	7
CHARGE OF AGREEMENT	7
CHARGE OF EQUIPMENT AND LEASES/HP AGREEMENTS SCHEDULE	7
PLEDGE OVER SHARES	7
THIRD PARTY CHARGE OF SECURITIES	7
LEGAL MORTGAGE OF LIFE POLICY	7
DEED OF SUPPLEMENTAL DEBENTURE	6
CHARGE OF BUILDING CONTRACT	6

Beyond the mainstream, you can see that things quickly get esoteric. Loans can be secured against any asset for each money that people owe the company (debtors) - a kind of pay day loan for business !

One of the more mainstream items is a MORTGAGE DEBENTURE. This is a little more dangerous. It's usually a standard mortgage against a fixed asset such as a building but also has a floating charge element against current and future assets. It basically means the bank can take a position against any assets and if it sees the value of security devaluing, call in the adminsitrators to liquidate the company assets. It's best to seek legal advice prior to committing to something like a mortgage debenture.

So if banks have the power to wind up a company, who and how many banks actually do this in practice?

So here's the analysis of winding up petitions raised against UK companies by companies in the financial services sector. We don't have the detail on the reason for each petition raised we simply know who raised the petition (ie which creditor). The petitions analysed are over the period 6th March 1997 - 8th August 2014.

Creditor raising Winding-up Petitions	# Petitions
RBS INVOICE FINANCE LIMITED	153
PREMIUM CREDIT LIMITED	81
CLOSE INVOICE FINANCE LIMITED	24
GO DEBT LIMITED	21
HSBC INVOICE FINANCE (UK) LIMITED	16
ING LEASE (UK) LIMITED	15
UNIVERSAL LEASING LIMITED	14
BARCLAYS BANK PLC	11
BANK OF SCOTLAND PLC	8
BARCLAYS MERCANTILE BUSINESS FINANCE LIMITED	8
FUNDING CIRCLE LTD	5
GOLDCREST FINANCE LIMITED	5
SME INVOICE FINANCE LIMITED	5
INVESTEC ASSET FINANCE PLC	5
KBC LEASE (UK) LIMITED	5
CLOSE BROTHERS LIMITED	4

The first thing to note is how few winding-up petitions there are relative to the number of mortgage charges - it looks like winding up a company is option of last resort. There are plenty of companies here not on the main list which implies they are marginal players. The main lender of Nat West (part of RBS) and RBS are not in this list although their subsidiary RBS Invoice Finance is!

There are several invoice finance companies (invoice factoring) here which implies using debt owed to you by your customers is a higher risk way of funding your business than secured debt.

So are the banks more reluctant to lend? Let's take a look and break down each of the companies month by month over the last 5 years.

Bank	09-Q1	09-Q2	09-Q3	09-Q4	10-Q1	10-Q2	10-Q3	10-Q4	11-Q1	11-Q2	11-Q3	11-Q4	12-Q1	12-Q2	12-Q3	12-Q4	13-Q1	13-Q2	13-Q3	13-Q4	14-Q1	14-Q2	14-Q3
National Westminster Bank	1651	2060	2011	2131	2193	2269	2153	1820	1596	1591	1606	1498	1543	1573	1479	1498	1469	1510	1664	1784	1962	2049	822
Barclays Bank	1340	1491	1495	1346	1305	1462	1502	1486	1592	1814	2165	1992	1924	1928	2153	1930	1794	2419	2255	2358	2147	2249	879
HSBC Bank	1148	1140	1272	1326	1178	1242	1426	1425	1413	1536	1708	1797	1670	1605	1622	1522	1342	1587	1649	1590	1431	1803	648
Lloyds Bank																			14	2678	2962	3442	1310
Royal Bank of Scotland	1067	1077	1078	982	915	958	808	824	691	747	857	850	1053	1012	852	1068	906	1133	1168	1577	1352	1461	690
Bank of Scotland	309	273	389	361	298	506	311	521	286	388	388	574	386	451	320	404	362	532	379	628	541	326	156
Clydsedale Bank	493	565	549	483	481	500	489	516	557	539	730	683	442	386	329	232	255	246	273	331	272	291	108
SVENSKA HANDELSBANKEN AB	273	322	280	276	293	363	418	467	561	645	784	783	757	681	871	1010	854	784	888	920	917	962	360
AIB GROUP (UK)	195	151	110	179	158	136	82	109	90	82	82	63	80	97	65	102	134	131	168	137	155	184	58
LLOYDS TSB COMMERCIAL FINANCE LIMITED	243	305	383	663	407	401	391	394	429	474	495	495	588	529	580	547	542	607	553	105	1	0	2
Total	6719	7384	7567	7747	7228	7837	7580	7562	7215	7816	8815	8735	8443	8262	8271	8313	7658	8949	9011	12108	11740	12767	5033

This shows a different story that the number of mortgage charges lodged has increased over the last 5 years ie There's more lending to businesses. Companies House data is based on outstanding mortgage charges so there is some survivorship bias. That being said loans of this type are usually long term loans and we're looking at a relatively short period of 5 years so the impact should be marginal. Some of the more established players have reduced the number of loans in recent years whilst others are aggressively growing - for example SVENSKA HANDELSBANKEN AB - they havent gone unnoticed and are mentioned in issue 706 page 16 (29th August 2014) of Money Week where they comment about the growing popularity of the Swedish bank and that it has 177 outlets in the UK now and each branch manager is given a lot of autonomy on decision making. To finish this analysis, we'll look at the sizes of companies that are borrowing and the age of companies that are borrowing to see if there's a particular profile that banks are targetting.

So here's the breakdown for mortgage charges for National Westminster for mortgage charges in 2014 and the size of the company based on the Companies House size classification.

TOTAL EXEMPTION SMALL	2601
NO ACCOUNTS FILED	1109
FULL	408
SMALL	202
DORMANT	172
TOTAL EXEMPTION FULL	145
GROUP	135
MEDIUM	67
AUDIT EXEMPTION SUBSIDIARY	3

The bulk of the lending is to small business (less than £6.5M turnover). As a large number are showing as no accounts filed, it suggests that these are fledgling companies, so let's look and see the age of these companies.

Age of Company (years)	# of charges from Nat West
0	411
1-5	1777
6-10	966
11-20	933
>20	758

A surprising percentage of charges relate to small young companies - it looks like National Westminster is open to taking some risks. How does the upstart HANDELSBANKEN compare?

TOTAL EXEMPTION SMALL	1445
NO ACCOUNTS FILED	353
SMALL	140
FULL	96
TOTAL EXEMPTION FULL	81
DORMANT	50
GROUP	47
MEDIUM	25
AUDIT EXEMPTION SUBSIDIARY	2

A similar picture for Handelsbanken where there are even stronger lending to small and new companies.

So in conclusion it seems the media is not giving an accurate picture on the availability of mortgages for small business. Lending levels appear to be increasing and lending to small and fledgling businesses doesn't seem to be a problem. There are 1.9M small companies registered with Companies House and 809k have a registered mortgage charge (excluding rent deposits). Presumably the other half don't need to borrow!