The Truth About Iwoca Business Loans: Why "Quick Cash" Could Cost You Your Home

Iwoca markets itself as a tech-savvy alternative to traditional business banking. They promise quick decisions, flexible lending, and support for small businesses that banks won't touch.

Here's what they don't put in big letters:

Nearly every Iwoca loan requires a personal guarantee, meaning you're personally liable if your business can't pay. That's your house, your savings, and your personal assets at risk.

When traditional banks turn you down, Iwoca appears to be a lifeline. But here's the reality check:

You're not just taking out a business loan; you’re agreeing to be personally liable for every penny if things go wrong. From what we've seen, when things do go wrong, Iwoca doesn't mess about.

Think about it this way: Would you take a personal loan with 2% to 6% interest per month, which, when annualised, can lead to an APR of roughly 24% to over 70%, depending on the terms and the borrower’s risk profile? This interest rate could threaten your business's solvency. That's essentially what you're accepting with a personal guarantee. The main difference is that Iwoca refers to it as a "business loan."

Iwoca has excellent reviews on paper, but look closer and you'll uncover some quite shocking stories.

One customer described them as operating "like a loan shark behind slick branding." Harsh? Maybe. But when you're receiving threatening calls about losing your house because your business hit a rough patch, you can understand the frustration.

Another customer mentioned that Iwoca wouldn't respond to 50% of their emails when they were trying to resolve payment issues. Imagine the stress that person was experiencing. Your business is struggling, you're trying to communicate, and they're just not replying.

Then there's the financial aspect. One person observed Iwoca add £7,000 in interest and fees while attempting to arrange a payment plan. Seven thousand pounds! On top of everything else they faced.

Here's what really caught our attention - the Financial Ombudsman Service has received numerous Iwoca complaints. We're referring to cases where:

• Iwoca continued lending to businesses they knew were struggling, which is irresponsible lending.
• Customers complained about threatening and intimidating debt collection practices.
• Family homes were put at risk through charging orders

When the ombudsman has to get involved, you know something's not right.

If your business is unable to secure loans from Barclays, HSBC, or other lenders, what is your plan? Are you considering borrowing at high interest rates of 24% annually in an attempt to turn your situation around?

Many of us have experienced those 3am moments when any solution appears better than watching everything fall apart. However, the harsh reality is that if your business struggles to secure standard bank funding, taking on expensive debt that jeopardises your home is unlikely to address the core issue.

Before contemplating Iwoca, explore all other options first. Use government schemes, asset finance, invoice factoring, anything that doesn't require you to put your home on the line.

If you're still considering them, have an independent person clearly explain that personal guarantee. We mean a thorough explanation. Understand what happens when situations become difficult.

The Real Debt Guy is always available to help you avoid a crisis.

Ask yourself the hard questions:

• If your business fails, can you personally afford to settle this debt?
• Are you solving a problem or just buying time?
• What would your family say if they knew you were putting your house on the line?

Don’t panic.

Yes, you’ve signed a personal guarantee, which means you are personally liable if your business can’t repay the debt, but you still have rights and options.

If you don’t have cash to pay off your debt, some people consider taking out a personal loan. While we don't recommend this choice lightly, we understand that sometimes options can be limited, and the main goal is to minimise the damage. Remember, borrowing personally means your new loan is protected under the Consumer Credit Act, offering you important legal safeguards like clearer terms and better complaint rights benefits that many business loans don't provide.

However, it’s important to understand the risks before borrowing more. Using personal loans to cover business debts can increase financial pressure and may not be suitable for everyone.

Disclaimer: This article is based on publicly available information including Financial Ombudsman decisions, customer reviews, and Iwoca's own terms

The Real Debt Guy is a qualified financial adviser and a UK debt expert. The information in this article is considered to be true and correct at the publication date..