Business Loan Brokers: directory of firms

Credit broking includes introducing borrowers to lenders, presenting or offering agreements, and doing preparatory work towards them. A firm that brokes credit to sole traders and small partnerships needs FCA permission for it, and you can confirm that on the Financial Services Register along with any appointed representative relationship.

The permission is narrower than most people assume. It does not authorise the firm to advise on a mortgage over your home, to advise on investments, or to arrange insurance, all of which are separate permissions with their own entries on the Register. If a broker offers to sort out a second charge on your house as part of a business funding package, check that the firm holds mortgage permissions as well.

The Register also names individuals in certain roles and records regulatory action against them. It costs nothing to look before you share three years of bank statements with a firm that cold-called you.

Two rules do most of the work. First, a credit agreement is exempt where the lender provides credit of more than 25,000 pounds and the borrower enters into it wholly or predominantly for business purposes. A signed business-purpose declaration creates a presumption that the exemption applies, although a lender cannot rely on it if it has reasonable cause to suspect the borrowing is really personal.

Second, a regulated credit agreement requires the borrower to be an individual or a relevant recipient of credit, which covers sole traders and small partnerships but not bodies corporate. Borrowing taken in a company name is therefore unregulated whatever its size.

Read what you sign accordingly. Look for the total amount repayable rather than a headline rate, for default interest, for early settlement terms, and for any personal guarantee or charge over your home that converts a company debt into a personal one.

The British Business Bank is the UK's economic development bank, wholly owned by the Department for Business and Trade and operationally independent. It does not lend to businesses itself. It works through delivery partners and uses government-backed guarantees that reduce a lender's risk so the lender is more willing to lend, alongside Start Up Loans for new entrepreneurs and equity programmes. Most of its group companies are not authorised or regulated by the FCA or the PRA, which is stated openly on its own site.

If a designated bank turns your business down for finance, the Bank Referral Scheme requires it to offer, with your permission, to pass your details to government-designated finance platforms that can look for alternative lenders. It costs nothing to accept the referral, and accepting it does not commit you to anything.

Most brokers take a commission from the lender, calculated as a percentage of the amount advanced. Some also charge the business a fee. Ask for both figures in writing, and ask whether the commission varies between the lenders being considered, because that is where a conflict of interest lives.

Be wary of any fee demanded before an offer exists. A legitimate broker may charge for work done, but an upfront payment presented as a deposit, an insurance premium or a condition of release is the standard shape of an advance fee fraud.

Being outside the consumer credit rules does not put a firm beyond complaint. The Financial Ombudsman Service reckons about 99 per cent of UK small businesses are within its reach, and that includes self-employed people, partnerships and limited companies. Whether yours qualifies turns on size tests that have applied since 1 April 2019 and that its small business guidance sets out; a firm above them has only the courts.

Complain to the broker or the lender first and wait for a final response, then refer the matter within six months of it. Using the Ombudsman costs nothing, and paying a claims management company to do it for you buys no advantage.