Before You SignWhat business finance actually costs, in the UK and the US

Are business loans regulated? UK FCA, FOS and US disclosure rules

Two questions get run together. Whether the FCA regulates the lending is one; whether you can take a complaint to the Financial Ombudsman Service is another, with its own test. In the US there is no single answer either — the disclosure rules are state law, and they do not all require the same thing.

Written by Kaz · Sources re-read 6 September 2026 · Page revised 13 October 2026 · What changed · How figures are checked

Usually not, and the answer depends on where you borrow and who the borrower is. In the UK, the FCA consumer-credit perimeter reaches three things: lending to sole traders and small partnerships borrowing £25,000 or less, the individuals who guarantee that borrowing, and some regulated mortgages where residential property secures business debt. A limited-company facility, and the director's guarantee behind it, sit outside all three. Being outside the perimeter does not close the complaint route: the Financial Ombudsman Service considers complaints from businesses that meet its size tests, and from personal guarantors whose guarantee was given on or after 1 April 2019. In the US there is no federal regime for business credit. Disclosure rules are state law, and only some states require the provider to show you a rate rather than dollar totals.

Three separate tests sit behind the one question: whether the lending is regulated, whether a complaint can go to an ombudsman, and what the lender has to show you about cost. They can come out differently for the same borrower, so this page takes them one at a time, UK first, then the US.

What the FCA perimeter covers

The perimeter is the boundary of the activities the Financial Conduct Authority regulates. Inside it, the Consumer Credit rules apply to the agreement; outside it they do not, and the contract carries more of the weight. The FCA set the line out when it answered the Federation of Small Businesses' super-complaint about personal guarantees. On the outside, in its own words: "Lending to limited companies where directors are required to provide personal guarantees."

That single sentence is the whole issue. Incorporating, the standard step for a growing business, moves its borrowing out of the perimeter whatever the amount.

Four common situations, against that line.

Your situation Inside the FCA perimeter? What that means in practice
Sole trader borrowing £20,000 Yes The Consumer Credit rules apply to the agreement
Sole trader borrowing £40,000 No Above the £25,000 line
Limited company borrowing £40,000, director signs a guarantee No The Consumer Credit rules do not apply to the guarantee; whether you can complain is a separate test
Borrowing secured on your home Sometimes Some arrangements fall under regulated mortgage rules

The perimeter checker runs this test and the ombudsman test below together.

Does the guarantee you sign carry the same protection?

It follows the borrowing the guarantee backs, not the person who signs it. A guarantee given by an individual for sole-trader borrowing of £25,000 or less is inside the perimeter, because the FCA lists those individuals there. A director's guarantee for a limited-company facility is outside it: the inside list names sole traders and small partnerships only, and attaches the £25,000 threshold to them rather than to companies. What the guarantee itself commits you to is covered in the guarantee guide.

Outside the perimeter, is there still an ombudsman?

Often yes. "Outside the FCA consumer-credit perimeter" and "no complaint route" are different statements, and the Financial Ombudsman Service publishes its own eligibility test. For the business, the test is size. For a guarantor, it is a date: the service says an individual who guaranteed their own business's borrowing "can only bring your complaint to us if it was given on or after 1 April 2019."

Question Test
Do the Consumer Credit rules apply? Sole trader or small partnership, £25,000 or less
Can I complain as the business? Micro-enterprise: "fewer than 10 people, and … annual turnover or a balance sheet that does not exceed €2 million". Small business: "annual turnover of less than £6.5 million and a balance sheet total of less than £5 million, or employs fewer than 50 people"
Can I complain as the guarantor? Guarantee given on or after 1 April 2019

On the ombudsman's own figure, roughly 99% of UK small businesses meet one of the size tests. Eligibility still turns on the firm, the activity and the facts, and none of this promises an outcome. But a lender or broker who says that being outside the perimeter means there is nowhere to go is describing a rule the ombudsman's own page does not support. The useful follow-up is which of the three tests they mean.

Will the FCA close this gap?

Not on any timetable it has announced. Its published response commits it to collecting data, reviewing firms' policies and publishing further guidance if the findings warrant it: a program of work, not a rule constraining what a lender may ask you to sign today.

Which US states require a cost disclosure

There is no federal disclosure regime for business credit, so what exists is state law, and the states that have a rule do not all require the same thing. The six below are the statutes and regulations we re-read on 6 September 2026. It is not a complete list, and whether a rule reaches a given deal turns on the state, the product and the size of the transaction.

The distinction that matters is not how many states have a rule. It is whether the rule makes the provider give you a rate or only a dollar total.

State Rule we read Does it require an annualized rate or APR?
California Financial Code division 9.5; SB 33 (2023); SB 362, operative 1 January 2026 Yes — the total cost expressed as an annualized rate, and SB 362 requires "annual percentage rate" or "APR" wording in specified circumstances
New York 23 NYCRR Part 600, commercial financing up to $2,500,000 Yes — the provider must disclose the annual percentage rate
Florida Fla. Stat. § 559.9613, "Disclosures" No — dollar amounts, total repayment, payments and prepayment
Louisiana R.S. 9:3137.10, Act 198 of 2025, effective 1 August 2025, revenue-based financing No — same shape of itemized dollar disclosure
Utah Commercial Financing Registration and Disclosure Act, Utah Code § 7-27-202 No — the section does not use the words annualized rate or APR
Virginia Va. Code § 6.2-2231, sales-based financing No — a stated finance charge, not an APR

Read the right-hand column before the left. California and New York hand you a rate you can set beside a bank quote. The other four hand you the pieces: funds provided, total to be repaid, the dollar cost, the payments, the prepayment position. Turning those into a comparable rate is left to you, which is what the cost tool does. The state disclosure checker shows which of the two groups you are in.

California is the rule that has moved most recently, and older summaries get it wrong. The annualized-rate obligation did not lapse on 1 January 2024: SB 33 removed that sunset, and Financial Code § 22802(b)(6) now lists "the total cost of the financing expressed as an annualized rate" among the six required disclosures, with no end date on it. SB 362 then took effect on 1 January 2026, requiring providers, on the DFPI's own account, "to use the term 'annual percentage rate' or the acronym 'APR' in specified circumstances."

What changes when you are outside the perimeter

Three things, and none of them is the interest rate.

  1. Which rulebook the lender works to. Inside the perimeter the Consumer Credit rules apply to the agreement. Outside it, the contract carries the weight, and the ombudsman route is tested separately.
  2. What has to be shown to you. Where no disclosure rule reaches your product, nothing we could verify obliges a lender to hand you one comparable cost figure.
  3. What "approved" means. A lender being authorized for some activities does not mean the facility it offers you is a regulated one. Authorization is at firm level, not product level.

The figure asks the same questions in the order that settles fastest which side you are on.

Which set of rules covers your borrowing

Are you borrowing in the UK or the US?
UK → Go to the next question
US → Go to the state question
Are you a sole trader or small partnership borrowing £25,000 or less?
Yes → Inside the FCA perimeter. The Consumer Credit rules apply to the agreement
No → Outside. The contract carries the weight, starting with the guarantee clause
Does your business, or your guarantee, meet the ombudsman's own test?
Yes → A complaint route may exist even outside the perimeter. The firm can confirm its FOS position in writing
No → Your route is the contract and the courts
Does a disclosure rule reach your state, product and amount?
Yes → The disclosure exists before you apply. Check whether it carries a rate or only dollar totals
No → Total dollar cost, estimated term and the prepayment position still make the offer comparable

The £25,000 figure and the perimeter wording are the FCA's own. The ombudsman test is the Financial Ombudsman Service's own: micro-enterprise or small business size limits, and guarantees given on or after 1 April 2019.

What this means for your decision

A UK sole trader borrowing £25,000 or less has the Consumer Credit rules behind the agreement. What remains open is which parts of the Consumer Credit sourcebook the lender treats as applying, and that is something the lender can confirm in writing.

A UK limited company gets no help from those rules, so the terms that matter sit in the facility agreement and the guarantee clause; the guarantee guide lists the clauses that decide what the director is signing. The ombudsman's size test is a separate check against the table above.

A business financing in California or New York is owed a disclosure that carries a rate, and it exists before anything is signed. Everywhere else in the US, the total dollar cost, the estimated term and the prepayment position are the figures that make an offer comparable, and providers operating in disclosure states already calculate all three.

Whichever describes you, the regulator decides what you must be shown, not what the money costs. The cost tool and where the money goes cover the second number.

Who should not spend time on this question?

If the facility can be cleared in full out of a single month's receipts, the regulatory question is academic: the arithmetic in the cost tool says more than the perimeter does. This guide matters when the facility is large enough, or long enough, that being wrong about it would hurt.

Sources

Next step

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What changed on this page

8 September 2026 Correction — The UK checker used to put a sole trader borrowing £25,000 or less against commercial premises inside the consumer-credit perimeter. Article 60D exempts that agreement: where the borrowing is secured by a mortgage on land and less than 40% of the land is a dwelling for the borrower or a related person, the agreement is exempt, and the article carries no money threshold at all. So the £25,000 line in article 60C(3) is never reached in that case. The checker now says so, and says which article does it.

7 September 2026 New — A UK perimeter checker was added. Six articles of the Regulated Activities Order were read in the original rather than in a summary: 60B(3) and 60L, under which a partnership of four or more members, an LLP or a company is not a borrower under a credit agreement at all; 60C(3), under which a business-purpose facility falls outside only when it exceeds £25,000, so a facility of exactly £25,000 is inside; 60C(5) and (6), under which a declaration of business purpose creates a presumption; and 61(3)(a) with 61A on mortgages. The checker answers whether the FCA perimeter reaches a facility, and answers separately whether the Financial Ombudsman Service could look at a complaint about it, because those are two questions with two different tests.

6 September 2026 Correction — California's annualized-rate requirement is now cited to the statute itself rather than only to the Legislative Counsel's Digest. Financial Code section 22802(b)(6) lists the total cost expressed as an annualized rate among the six required disclosures and carries no end date. The DFPI's own summary page still describes that requirement as running only until 1 January 2024, which is the position SB 33 changed.

6 September 2026 New — A state disclosure checker was added. Six state statutes were read in the original - California, New York, Florida, Louisiana, Utah and Virginia - and the checker answers, for a state, a product and a size, whether the regime reaches the deal and whether what it makes the provider hand you includes a rate. Size limits are now recorded where the statute states one: over $500,000 is outside Florida and Virginia, over $1,000,000 is outside Utah, and New York covers up to $2,500,000.

6 September 2026 Correction — The site no longer says that two US states regulate commercial-financing disclosure. Six were confirmed against their own statutes, and the guides now separate the two that require an annualized rate (California, New York) from the four that require itemized dollar amounts only (Florida, Louisiana, Utah, Virginia). The question that matters to a borrower is not how many states have a rule, but whether the rule produces a rate you can hold against a bank quote.

6 September 2026 Correction — California's annualized-rate disclosure was described as expiring. SB 33 removed that sunset, so the requirement continues indefinitely, and SB 362 has required the words annual percentage rate in specified circumstances since 1 January 2026.

6 September 2026 Correction — Whether the FCA regulates a facility and whether the Financial Ombudsman Service can look at a complaint are now treated as two separate questions with two separate tests. The site previously implied that a company borrower outside the perimeter had no ombudsman route. Eligible small businesses can complain, and so can personal guarantors where the guarantee was given on or after 1 April 2019.

The whole change log