Do You Need to Be FCA-Regulated to Offer Finance to Your Customers?

It's the question we're asked more than any other by suppliers, and it's the reason a lot of good businesses never offer finance at all. The assumption is that introducing a customer to funding means becoming a regulated finance business, with all the cost and administration that implies.

For most commercial transactions, that assumption is wrong. Here's how the boundary actually works, and what it means for a fit-out contractor, renewable-energy installer or equipment supplier who wants to offer finance as part of a quote.

What does the FCA actually regulate?

The Financial Conduct Authority regulates consumer credit. The purpose is to protect individuals, and certain smaller unincorporated businesses that are treated similarly to individuals, from unsuitable lending.

What it does not generally regulate is lending between businesses. When a limited company borrows money for a business purpose, the transaction usually falls outside the consumer-credit regime entirely. Both sides are treated as commercial parties capable of assessing the deal.

That distinction is the whole answer. The question isn't really “am I regulated?” It's “what kind of borrower is my customer, and what are they borrowing for?”

Where does the regulated perimeter start?

There are situations where a business-facing transaction can still fall inside the regulated perimeter. The main ones to be aware of:

• Lending below £25,000 to a sole trader, a partnership of two or three people, or certain unincorporated bodies. These borrowers can be treated as consumers for regulatory purposes.

• Any lending to a private individual, rather than to a business entity.

• Borrowing that is not wholly or predominantly for business purposes, even where a business is technically the borrower.

If your customer is a limited company borrowing £80,000 to fund a commercial fit-out, none of those apply. If your customer is a sole trader borrowing £14,000, it's a different conversation, and one worth having before anything is quoted.

What does introducing finance actually involve?

There's a meaningful difference between arranging finance and introducing someone to a broker who arranges it.

Arranging finance means assessing the customer's circumstances, recommending a product, negotiating terms with lenders and managing the credit process. That's our job, and it's the part that carries the regulatory and professional weight.

Introducing means telling a customer that finance is available, giving them an indicative figure we've prepared, and passing them to us to take forward. You're not advising on which product suits them, you're not assessing their creditworthiness, and you're not the one approaching lenders.

In practice, that's what a supplier partnership looks like. You quote the project as you always would. If the customer wants to spread the cost, you introduce us. We handle everything from that point and keep you updated throughout.

What happens if a transaction does need regulated handling?

We check. Every transaction is reviewed before it goes anywhere near a lender, and part of that review is identifying whether it sits inside or outside the regulated perimeter.

If a deal does require regulated handling, we tell you, and it's managed appropriately. What you should never end up with is a transaction you've introduced in good faith that turns out to need permissions nobody checked for.

Why suppliers offer finance in the first place

The regulatory question matters, but it's worth remembering what's on the other side of it. Suppliers who present finance alongside a quote consistently report the same three things:

• Fewer projects stall on price. A £90,000 project is a different conversation when the customer is comparing it to a monthly figure rather than a capital outlay.

• Larger scopes get approved. Customers who were going to refurbish two floors sometimes do three, because the incremental monthly cost is modest.

• Cash flow improves on delivery. Stage payments mean you're paid through the project rather than carrying the cost to completion.

One serviced office operator we worked with had allocated cash for a three-floor refurbishment. Financing it instead freed that capital, delivered a better return through asset depreciation, and let them add upgrades they'd originally cut from the scope.

Frequently asked questions

Do I need FCA authorisation to tell a customer that finance is available?

Generally not, where the customer is a limited company borrowing for business purposes. Telling a customer finance exists and introducing them to a broker is different from arranging or advising on the finance yourself.

Does offering finance cost my business anything?

No. There's no cost to introduce a customer, no software to buy, and no minimum volume. We prepare finance illustrations on request, whether or not the customer proceeds.

Will I lose the relationship with my customer?

No. You stay the main point of contact for the project. We manage the funding conversation alongside you, not instead of you, and we keep you updated at every stage.

What if my customer is a sole trader rather than a limited company?

Then it's worth a conversation before you quote. Depending on the amount and the purpose, it may fall inside the regulated perimeter, and we'll tell you how it needs to be handled.

Talk it through

If you're weighing up whether to offer finance to your customers, the fastest way to get a clear answer is a short conversation about the kind of projects you quote and the kind of customers you work with.

No obligation, and no commitment to change how you sell.

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