Two trade bodies have warned that “debt stacking”, where businesses take out several loans at once, threatens the “financial resilience of UK businesses” and poses “significant risks” to borrowers, with the Finance and Leasing Association (FLA) calling for industry action on the practice.
The FLA, the trade body for the asset, consumer and motor finance sectors, said some of its members had reported “on trends in this area”.
Loans made in this way are usually at high interest rates and with a short term that can send businesses into a spiral of debt, according to The Times. An investigation by the newspaper in September found one small business compared to 15 different financing facilities whose average interest rate is around 20 percent.
“For businesses facing immediate cash flow pressures, additional loans may offer a solution,” said Shanika Amarasekara, chief executive of the FLA. “But if the loan is not structured properly, it can delay the problem while increasing the financial pressure on the business.”
The issue, he added, is “whether the total debt is affordable, appropriate and supports long-term success”.
FLA members say they are making £40.3bn of new funding available to UK businesses in 2025 and £27.4bn in the first eight months of 2026.
Brokers are warned about commissions
The National Association for Commercial Finance Brokers (NACFB), which represents brokers who arrange transactions between businesses and lenders, has also written to its members about poor practices in the industry.
In a letter sent in September, it expressed “increasing concerns” about the loan pile, which could “create a significant risk for customers” and could “increase customers’ financial vulnerability and could cause serious financial harm”.
In a letter later that month, the NACFB warned members that “commission arrangements must be handled openly and transparently”. He said he knows some dealmakers “add a commission to the value of the invoice”, in some cases including it in the amount financed instead of clearly labeling it to the customer. Both letters are available to the public.
“If a commission is incorporated into an invoice or finance amount without the customer’s knowledge, there may be a secret commission,” the letter said. The NACFB added that it would not tolerate “this practice” among its members.
Commercial finance brokers connect companies with a number of banks and alternative lenders. According to the NACFB, its member brokers will generate £33bn in lending to small and medium-sized enterprises (SMEs) by 2025, up 25 per cent on the previous year.
The Times has previously reported that brokers are sometimes pushed to sell expensive loans, even if it is not necessarily in the borrower’s best interest.
NACFB said it requires each member to provide “a clear and concise written reason explaining why the proposed product and the creditor are suitable for the customer’s identified needs and circumstances”.
Regulatory review
Small business loans remain unregulated, and business borrowers have fewer protections than those available to consumer borrowers.
A reviewed by the Financial Conduct Authority published on September 17 found that SMEs face challenges accessing finance, including lack of awareness about options and confusion over complex products. However, City regulators found “no evidence” that the SME credit regulations themselves were causing the problem.
Watchdog opened a review in March why UK SMEs are taking less rather than business in other countries, and whether the rules themselves contribute to the problem.
By October 2025, the Bank of England said its financial policy committee had identified barriers preventing high-growth businesses from accessing finance.
A review by the Department of Business and Commerce in 2025 said that the cost of money was “prohibitively high” for many businesses.