The Federation of Small Businesses (FSB) has expressed its concerns over lenders’ increasing use of personal guarantees (PGs). In a letter to the FCA the national chair of the FSB argues that the FCA risks losing the confidence of small businesses by focusing too narrowly on the problem. The FSB has filed a ‘super-complaint’. It expressed concern that small business owners were being deterred from applying for bank loans due to PG demands. The FCA responded by stating that its ability to investigate and act is restricted by its regulatory parameters. The FSB criticised the FCA’s decision, accusing it of side-stepping the core issue. It called for action to improve the lending market for small businesses.

BFS Comment:

This increased reliance by Lenders on PGs has been a growing problem for many SME owners for some time now. Having said this, Lenders cannot be blamed for taking precautions in the current economic climate and political termoil. Why give an unsecured loan if there are doubts about the ability of the borrower to repay on schedule? If you are coming up against this problem when seeking finance for your business, give us a call at BFS or e-mail to and ask for a free consultation about options that may be available.

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