While the question of whether to regulate business loans has been broadly discussed and considered over the years, at this stage, entities making commercial loans, being loans to businesses, do not require regulatory authorisations to do so.
- commercial finance can become subject to regulation when the business is provided with a secured loan against property, and the property is owned by an individual or occupied by persons related to the borrower as their home. Such a loan would then be regulated by the Financial Conduct Authority under the residential mortgage rules.
- the lack of regulation means that commercial finance can allow for parties to come to commercial finance solutions. However, it also means that there is little to no protection for new or fledgling businesses who may be unfamiliar with commercial finance and the operation of secured lending and business funding.