- New data reveals that UK small businesses are taking on multiple high-interest loans from online lenders offering rapid access to cash, when some of the firms could be saving an average of £10,000 per month in interest
- Many businesses have ‘stacked’ loans (multiple high-cost loans at once), raising questions about whether lenders are undertaking proper affordability assessments and ensuring businesses are well informed of the risks they are taking on
- Commercial finance brokers were involved in 70% of the high-cost loans; since broker commissions are not legally required to be disclosed or transparent, research is needed into whether any lenders pay brokers high referral commissions, creating misaligned incentives
- Small businesses who were able to refinance with Community Development Finance Institutions (CDFIs) cut repayments by an average of £120,000 a year
- Responsible Finance urges Government to consider regulation around pricing transparency, affordability checks and mandatory disclosure of broker fees to improve customer outcomes for small businesses
The research, published today (23 September 2026) by Responsible Finance, reveals that UK small businesses are taking on multiple high-interest loans before turning to CDFIs to seek refinancing.
Commercial finance brokers had been involved in nearly 7 out of 10 of the high-cost loans, yet CDFIs were able to refinance at least 40% of them, prompting calls to establish whether businesses had been sold products which were not the most appropriate for their circumstances when lower-cost products may have been available.
For the study, 10 Community Development Finance Institutions (CDFIs) – social enterprises that specialise in supporting businesses and people who can afford to repay a loan but struggle to access finance – reported small businesses’ enquiries to refinance loans over a 3.5 month period (13 March-29 June 2026).
Our analysis revealed that more than half of these 71 businesses had ‘stacked’ (multiple) high cost loans simultaneously, and that, for the businesses CDFIs were able to help (more than half of the businesses, with others still under consideration), CDFIs could reduce monthly repayments by an average of nearly £10,000 per business — freeing up around £120,000 a year.
Key findings:
- CDFIs received over 70 refinancing enquiries involving nearly 150 high-interest loan facilities from 31 different lenders, worth about £9m in lending
- Over half of businesses had ‘stacked’ loans (multiple high-cost loans at once)
- Commercial finance brokers were involved in 70% of the high-cost loans
- CDFIs were able to offer refinance to 28 businesses (40%); a further 24 cases (34%) remain under consideration and may be able to be refinanced by CDFIs
- CDFI refinancing reduced those businesses’ loan repayments by an average of about £10,000/month for each business, or £120,000 a year – a significant sum for a small firm
The findings provide one of the first structured evidence bases describing businesses seeking to refinance high-cost borrowing through the responsible finance sector. They identify recurring characteristics that warrant further exploration and more research should be done into the extent of the issues. Concurrently, CDFIs’ estimates reported to Responsible Finance suggest that refinancing high-cost borrowing now accounts for a substantial share of enquiries, ranging from around 50% to 70% for those reporting.
The findings reveal several themes:
- Businesses approaching CDFIs to refinance want to reduce the cost of their repayments.
- Loan stacking appears to be a recurring characteristic of the cases submitted by CDFIs rather than isolated examples: many businesses have taken out new, concurrent loans.
- Brokers appear to play a major role in businesses using expensive lenders / products. Within this research we did not explore whether these lenders pay higher broker commissions.
- Businesses may be reaching CDFIs after their borrowing has become increasingly complex, rather than at the point finance is first required.
- CDFIs appear well placed to offer lower-cost refinancing solutions for viable businesses, although further evidence would be required to quantify realised customer outcomes. Where CDFIs were able to quantify the impact, refinancing had the potential to release substantial monthly cashflow back into businesses.
- The analysis likely understates the true cost of high-cost borrowing. It captures reported interest rates but not the arrangement fees, brokerage charges, default fees and other costs often layered onto these facilities. The actual financial burden on businesses—and the potential benefit of refinancing through a CDFI—may be materially greater.
Theodora Hadjimichael, CEO of Responsible Finance, which represents Community Development Finance Institutions (CDFIs), said:
It’s frustrating to see how some of the UK’s amazing small businesses are struggling with high-cost loans. If they had been introduced to CDFIs earlier, many would have reduced their debt burden, hold on to more of their cash flow and be in a better position to grow. Small businesses are ultimately people and we believe targeted regulation will drive more transparency and good outcomes for small businesses. Meanwhile, we want banks and other local partners to increase their investments in community lenders and worker harder to refer to them, so that more small businesses can get the right support at the right time.”
In light of the findings, Responsible Finance recommends:
- More research is done on the market size and outcomes of high-cost lending.
- The government should investigate the high-cost business loans market and consider introducing targeted regulation around responsible lending, affordability checking, transparency and disclosure for brokers and business lenders.
- More banks, accountants, business support agencies and other business-facing partners should signpost to CDFIs.
- Financial education and awareness should be built into these touch points to enable small businesses to make informed decisions about their funding.
- Continued investment and funding into the CDFI sector to drive its growth to be able to reach businesses sooner.
The full research findings are available here: 
Analysis of CDFI refinancing high cost loans
Download – 317.10 KB
Analysis of CDFI refinancing high cost loans
September 2026
Download – 317.10 KB
ENDS
Community Development Finance Institutions (CDFIs) are social enterprises that specialise in supporting businesses and people who can afford to repay a loan but struggle to access finance. They play a vital role in expanding economic opportunity across the UK and back thousands of customers every year through a relationship-based approach.
In 2025 CDFIs lent £181.4m to 6,869 small businesses, creating and sustaining thousands of jobs. Banks, the Government, MPs and the media recognise the essential role of CDFIs in unlocking opportunities.