The Loan
What is the minimum and maximum loan size?+
Flofund provides secured business loans from £50,000 to £350,000. This range is our strategic sweet spot: large enough to generate meaningful interest income relative to origination costs, and small enough to sit below the thresholds where high-street banks compete aggressively.
What is the interest rate?+
All Flofund loans are priced at 19.0% per annum, fixed for the full duration of the loan. There is no variable rate risk. This rate is in line with the established market standard for secured SME lending.
What security is required?+
Flofund requires a first or second charge over residential property in England and Wales. Personal guarantees from all directors or shareholders with more than 25% equity are also required. The combined LTV (including any prior charge) must not exceed 70% for a first or second charge. An independent RICS valuation is required on all secured loans.
Can you lend to businesses with adverse credit?+
Yes — within limits. Flofund uses human underwriting on every case, which means we can consider applications where automated systems would decline. Pre-pack acquisitions, turnaround situations, HMRC arrears refinancing and minor historical credit issues are all considered on their merits. Active undischarged CCJs, undisclosed insolvency history or current winding-up petitions would typically result in a decline. Contact us before investing in a full pack.
Can I repay early?+
Yes. Borrowers may repay in full at any time. An early repayment fee of 1 month's interest on the outstanding balance applies. Interest is calculated daily, so any early settlement results in a material saving for the borrower relative to the original repayment schedule.
For Brokers
Do you accept direct borrower applications?+
No. Flofund is a broker-only lender. We do not accept direct applications from borrowers. All cases must be introduced by an NACFB-registered broker or FCA-authorised credit intermediary. If you are a business owner seeking finance, please speak to a commercial finance broker who can introduce your case to us.
What is your procuration fee?+
The standard broker procuration fee is 1.75% of the net loan value, payable within 48 hours of drawdown. Brokers can earn a +0.25% refinance uplift where a client refinances unsecured or merchant cash advance debt into a Flofund loan, and a +0.25% loyalty bonus from the 5th completed Flofund loan in a calendar year. The maximum combined fee is 2.5%.
How quickly do you respond to cases?+
We aim to acknowledge every new case submission within 4 business hours and to issue an in-principle decision within 48 hours of receiving a complete case pack. If we need additional information, we will contact you promptly with a specific list of requirements — not a generic request for "more information".
Do I need to be an NACFB member to introduce business?+
You must be FCA-authorised as a credit broker or mortgage intermediary to introduce business to Flofund. NACFB membership is strongly preferred — Flofund is an NACFB Patron Lender — but we will consider introductions from other FCA-regulated intermediaries. Please contact us to register before submitting your first case.
What happens if I miss a payment?+
If a scheduled payment is missed, Flofund will contact you within 24 hours to understand the reason. A missed direct debit incurs a £25 returned payment fee. If the account moves into arrears, a monthly arrears review fee of £25 applies from month two onwards. We always seek to work constructively with borrowers facing temporary difficulties — early communication is essential. Please contact us immediately if you anticipate a payment issue. Our full tariff of charges is published on our Product page.
What is Open Banking and do I have to use it?+
Open Banking is a secure, FCA-regulated system that allows you to share your business bank account data with Flofund electronically, with your consent. It gives us instant access to 12+ months of categorised transaction history, which can significantly speed up credit assessment. Open Banking is always optional — you may provide PDF bank statements instead — but borrowers who connect via Open Banking typically receive faster decisions. The connection is read-only: we cannot make payments or initiate transactions.
What is a personal guarantee and do I have to give one?+
A personal guarantee (PG) is a legal commitment by an individual (usually a company director or major shareholder) to repay a debt if the company cannot. Flofund requires a PG from all directors and shareholders with more than 25% equity. Guarantees are given on a joint and several basis — each guarantor is individually liable for the full amount. Flofund strongly recommends that all guarantors take independent legal advice before signing. Where your personal residence is part of the security, a certificate of independent legal advice from a solicitor is required.
Is the interest rate fixed for the whole term?+
Yes — absolutely. All Flofund loans are fixed at 19.0% per annum for the full duration of the loan, regardless of what happens to Bank of England base rates, SONIA, or the broader interest rate environment. Your monthly repayment will not change. This is one of Flofund's key product features: borrowers and brokers know exactly what the cost of credit will be from day one, with no variable rate risk and no payment shocks.
Can I borrow more against the same security later?+
Yes. Existing Flofund borrowers in good standing may apply for a further advance against the same property without going through a full new application. Flofund will assess the current LTV position (an updated valuation may be required) and your repayment track record. If approved, a further advance can typically be processed significantly faster than a first loan. Brokers receive a procuration fee on each further advance drawdown.
What is an APRC and why is it higher than my stated rate?+
The Annual Percentage Rate of Charge (APRC) is a standardised FCA measure of the total cost of credit, expressed as an annual percentage. It includes not just the interest rate but also the arrangement fee and other costs, spread over the loan term. This is why the APRC (typically around 24% for a standard Flofund loan) is higher than the 19% annual interest rate: it captures the full cost of borrowing. All lenders regulated by the FCA are required to quote an APRC — it is designed to help you compare loan products on a like-for-like basis.
Are loan repayments tax deductible?+
The interest element of your loan repayments is generally tax deductible as a business expense — reducing your company's taxable profit. The capital repayment portion is not deductible. For sole traders, this treatment depends on how the loan is structured. Flofund does not provide tax advice — please consult your accountant regarding the tax treatment of your specific loan before completing your application. Your accountant can also advise on whether the arrangement fee is deductible in the year of payment or amortised over the loan term.
Regulation & Compliance
Is Flofund FCA regulated?+
Flofund is in the process of obtaining direct FCA authorisation as a regulated mortgage lender and consumer credit firm. During this period, we are operating as an Appointed Representative of an existing FCA-authorised principal firm. All lending is conducted under FCA-regulated permissions and complies with the FCA Consumer Duty, CONC and responsible lending standards.
What AML/KYC procedures do you follow?+
Flofund complies fully with the Money Laundering Regulations 2017 and the Proceeds of Crime Act 2002. All borrowers and directors undergo electronic identity verification, PEP and sanctions screening, and source of funds/wealth verification for loans above £50,000. We use a regulated AML platform for all identity checks.
How do I make a complaint?+
If you have a complaint, please contact us in writing at complaints@flofund.co.uk or by post to our registered address. We will acknowledge your complaint within 5 business days and aim to resolve it within 8 weeks. If you remain dissatisfied, you may be entitled to refer your complaint to the Financial Ombudsman Service (FOS). Our Complaints Officer reviews all unresolved complaints and you have the right to appeal any decision within 15 days of receiving our final response.
What is Consumer Duty and how does it protect me?+
The FCA's Consumer Duty (effective July 2023) sets a higher standard of care for firms dealing with retail customers. It requires lenders to act in customers' best interests, provide products and services that meet their needs, communicate clearly, and offer appropriate support. Flofund is designed to comply with Consumer Duty in full: we provide clear upfront cost disclosure, APRC illustrations, honest credit decisions, and accessible complaints handling. If you feel Flofund has not met these standards, you can raise a complaint with us or escalate to the Financial Ombudsman Service.
For Investors
What return can I expect as an investor?+
Flofund's financial model targets a net return on equity of approximately 18–22% in the levered phase (Year 3 onwards), when bank credit facilities supplement family capital. In the early unlevered phase (Years 1–2), net ROE is lower as the book builds. All loans are priced at a fixed 19% p.a. — there is no variable rate income risk on the lending side. Returns are generated by the net interest margin between our lending rate and the cost of funds, minus operating costs and provisions for expected losses.
What is the credit risk and how is it managed?+
Every loan is secured on UK property with a maximum LTV of 70% for first and second charges. Personal guarantees from directors provide an additional recovery layer. The portfolio is provisioned at 1.5% of the loan book (gross) each year. Historical data from comparable lenders suggests recovery rates on secured SME lending of 70–85% — meaning that even in loss scenarios, a significant proportion of principal is recovered through property enforcement. Flofund's founders have their own capital invested in every loan.
What happens if interest rates rise sharply?+
Flofund lends at a fixed rate of 19% p.a. — so rising interest rates do not affect the income generated on existing loans. In the levered phase, Flofund borrows from banks at a variable rate (SONIA + margin, typically ~7–8% in the current environment). Even if SONIA increased significantly, bank borrowing costs would need to reach approximately 14% before the levered book became unprofitable — a scenario not seen in the UK since the 1980s. The fixed-rate lending model provides a substantial buffer against interest rate risk.
How is the loan portfolio monitored?+
All loans are tracked in Flofund's loan management system, with automated payment collection via direct debit. Accounts entering arrears are flagged immediately and escalated through a structured collections process: early arrears contact, formal demand, solicitor instruction, and — where necessary — LPA receiver appointment and property enforcement. Monthly portfolio reviews cover book quality, arrears levels, LTV distribution, and provision adequacy. Investors receive quarterly reporting packs.