UK Non-Bank Lenders Face Scrutiny as Personal Guarantees Cost Entrepreneurs Their Homes

Alternative lenders Iwoca and Funding Circle are facing renewed scrutiny over personal guarantee clauses after entrepreneur Callum Vincent risked losing his home following the collapse of his sports science business Lumi Therapy in 2025. Vincent borrowed £250,000 from each lender after mainstream banks refused funding. Iwoca secured an interim charging order against his house last month, despite his settlement offer that would have cost the lender a £35,000 net loss. Iwoca instead claimed £184,000 plus accrued interest. Funding Circle agreed a repayment deal. The case highlights risks in the growing non-bank SME lending sector. Iwoca's rates equate to APRs of 20pc to 96pc, versus the Bank of England's 6.63pc average for major UK banks in August. The FSB warns personal guarantees fall outside FCA regulation, creating a "chilling effect" on the economy. Iwoca has brought over 90 High Court debt claims this year, accounting for more than half of commercial disputes issued at the High Court in Leeds.