We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What are Secured Debentures?

Jim B.
Updated Feb 25, 2024
Our promise to you
WiseGeek is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At WiseGeek, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Secured debentures are long-term investment vehicles similar to bonds where companies essentially borrow capital from investors. The company that is the issuer of the debenture usually agrees to pay back the investor interest until the completion of the debenture agreement, at which point the principal is also repaid. One main advantage of secured debentures over other types of debentures is that they allow the investor a bit more protection. Should the issuer default on the repayment, the debenture holder can make a claim on the assets of the issuer until repayment is complete.

Long-term investors with great amounts of capital often look to gain equity in companies on the strength of their investments. The problem with equity is that the investor will get no return on his capital and could even lose a significant amount should the company struggle or go under. For that reason, investors may wish to invest in debt as a safer way to see a return. Secured debentures allow investors to be involved in business investment with some degree of safety.

It is important to distinguish secured debentures from other unsecured types of debentures. In an average debenture, the debt holder has no real recompense should the issuer of the debenture default on its agreement to pay back the loan. The debenture holder would have to get in line with all other common debt holders in an attempt to regain the capital hat has been loaned. This is a lengthy process that may never actually come to fruition for the investor.

On the other hand, secured debentures act in much the same way as mortgages. Whereas in a mortgage the mortgage holder may take possession of a home if the buyer doesn't repay the mortgage loan, the holder of a secured debenture may claim possession of the assets of the company that issued the debenture. This makes it much more likely that the debenture holder will get all of his money back along with the interest owed on the loan.

It is important to note that the laws surrounding secured debentures require that the lenders be provided with detailed information regarding the company issuing them, such as the company's bond rating. Debentures generally have a duration of anywhere between one to ten years, with the lender receiving regular interest payments from the issuer up until the agreement expires. At that point, the issuer of the debenture is required to pay back the original principal amount to the investor.

WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Jim B.
By Jim B.
Freelance writer - Jim Beviglia has made a name for himself by writing for national publications and creating his own successful blog. His passion led to a popular book series, which has gained the attention of fans worldwide. With a background in journalism, Beviglia brings his love for storytelling to his writing career where he engages readers with his unique insights.
Discussion Comments
Jim B.
Jim B.
Freelance writer - Jim Beviglia has made a name for himself by writing for national publications and creating his own...
Learn more
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.