CIC Loans: Borrowing Under the Asset Lock and Interest Cap
A Community Interest Company can borrow on the same legal footing as a normal Ltd, but the asset lock and the cap on performance-related interest restrict how lenders structure deals. This guide covers the rules, which UK SMB lenders are comfortable with CIC structures, and the practical mix of grant funding plus commercial debt that most CICs end up running.
Director, BestBusinessLoans
Oliver leads BestBusinessLoans's editorial reviews and methodology. With a background in UK commercial finance, he oversees lender research, rate verification and review independence.
Last reviewed: 7 May 2026
What a CIC is and why it matters for borrowing
A Community Interest Company is a UK Ltd company regulated additionally by the Office of the Regulator of Community Interest Companies. It can be limited by shares or by guarantee. Two features matter for lenders. The asset lock prevents the CIC from transferring assets at less than market value except to another asset-locked body or for the community benefit. The performance-related interest cap (Schedule 1 of the Community Interest Company Regulations 2005) limits dividends and performance-related interest payable to investors and lenders. CICs can take loans, give security and sign personal guarantees on the same legal basis as ordinary Ltd companies; it is the rate structure that differs.
The interest cap explained
The Community Interest Company Regulations 2005 cap performance-related interest (where the rate of interest depends on the company's performance) at the higher of: 4 percentage points over Bank of England base rate or the maximum rate set by the Regulator from time to time. Fixed-rate interest is not capped, only performance-related interest. Most UK SMB lending is fixed-rate or variable-rate-linked-to-base-rate, neither of which is "performance-related" in the regulatory sense, so the cap rarely binds in practice for term-loan and asset-finance products. Profit-share and revenue-based finance structures (where the lender takes a percentage of revenue or profit) can engage the cap; in those cases the lender needs to be comfortable with the limit.
BBL-reviewed lenders that accept CIC structures
Lenders are split into three groups. Group one, comfortable with CIC: Allica Bank lends to Ltd companies including CICs limited by shares, taking standard fixed-charge security. OakNorth structures bespoke deals where the underlying business is a CIC limited by shares with strong asset cover. Time Finance and Aldermore engage with CIC asset finance and invoice finance on standard terms; the asset lock does not prevent assignment of book debts or hire-purchase arrangements provided the contractual terms respect the asset-lock requirements at termination. Just Cashflow has accepted CIC applications where the company has 2+ years of trading and clean credit. Group two, mainstream that may engage on the strength of the case: Funding Circle and iwoca accept Ltd applicants generally and have funded CICs case-by-case where the CIC is limited by shares with a strong trading record. Group three, less suitable: MCA-only lenders (Capify, 365 Business Finance, Liberis, YouLend) underwrite against card flow and the CIC structure does not normally cause issues, but charity-style CICs without commercial card flow are a poor fit for the product. Specialist post-decline lenders (Bizcap, JPM Capital, Bolton Finance) engage on a case basis.
Asset-lock-friendly security structures
Lenders take standard fixed and floating charges over CIC assets the same way they would over an ordinary Ltd. The asset lock affects the destination of any surplus on enforcement, not the lender's priority. On enforcement, the lender recovers from the secured assets first; only the surplus after enforcement, fees and other secured creditors is subject to the asset-lock direction. In practice, lender enforcement against a CIC works the same as against any other Ltd. Personal guarantees from CIC directors are also enforceable on the same basis as for any Ltd: the asset lock applies to the company, not to the director's personal assets.
Routing grant funding alongside commercial debt
Most CICs run a hybrid funding stack: grant funding for the social-purpose activity, commercial debt for working capital and asset acquisition. Big Society Capital, Power to Change and Access (the Foundation for Social Investment) all fund CICs through accredited social-investment intermediaries; the loans are structured to respect the asset lock and interest cap. UK Growth Guarantee Scheme accredited lenders (Funding Circle, Allica, Aldermore, Time Finance among others) can underwrite CIC applications under the scheme. The trade-off is that government and social-investment lending tends to take longer than fintech alternatives but is often available at lower headline rates and with longer terms.
Practical pre-application checklist
First, confirm the CIC structure: limited by shares vs limited by guarantee. CICs limited by shares attract a wider lender pool because shareholding can take some of the equity-style risk. Second, file the latest CIC report (form CIC34) on time. Lenders read CIC reports for the social impact narrative; late filing flags. Third, pull the latest statutory accounts and audit trail; CICs over the audit threshold need audited accounts. Fourth, prepare a use-of-funds statement that respects the asset-lock direction at exit (any surplus on disposal of secured assets is asset-locked). Fifth, identify whether the application is for a fixed-rate or variable-rate product (most are; cap does not bite) or a profit-share or revenue-based structure (cap does bite; flag at quote stage).
FAQ
Can a CIC limited by guarantee borrow from a UK SMB lender?
Yes. A CIC limited by guarantee is a Ltd company on the same legal basis as a CIC limited by shares; both can borrow, give security and sign guarantees. The lender pool is narrower because there are no shares for any equity-style component, but mainstream and challenger lenders engage with CIC-by-guarantee on standard term-loan terms where the trading record supports the case.
Does the asset lock prevent a lender taking a debenture?
No. The asset lock allows transfer of assets at full market value, which is what enforcement under a debenture does. Standard fixed and floating charges work on a CIC the same way they work on an ordinary Ltd. The asset-lock direction applies only to any surplus after enforcement, fees and other secured creditors are paid.
Can a CIC director sign a personal guarantee?
Yes. Personal guarantees from CIC directors are enforceable on the same basis as PGs from directors of any Ltd. The asset lock applies to the company, not to the director's personal assets. Most UK SMB lenders that engage with CICs require a director PG on the same terms as for an ordinary Ltd.
Will an MCA work for my CIC?
Only if the CIC has commercial card-machine flow. MCA underwrites against the daily card take and the CIC structure does not normally cause an issue. Charity-adjacent CICs that fund themselves through grants and donations rather than commercial sales are a poor fit. Capify, 365 Business Finance, Liberis and YouLend all underwrite case-by-case where card flow supports the deal.
Are CIC loans cheaper than ordinary Ltd loans?
Not from commercial lenders. Mainstream and challenger lenders price CIC applications on the same risk basis as any other Ltd. The CIC structure is not a credit positive in itself. Dedicated social-investment lenders and grant-blended finance can be cheaper but take longer and impose impact-reporting obligations.
Can a CIC use the Growth Guarantee Scheme?
Yes. The Growth Guarantee Scheme is open to UK SMEs (turnover under £45m) including CICs. Applications go via accredited lenders (Funding Circle, Allica, Aldermore, Time Finance and others). The scheme guarantees 70% of the lender's exposure, which often unlocks cases where the lender would otherwise decline on commercial terms.
Does the interest cap bite on a standard term loan?
No. The cap applies to performance-related interest only. Fixed-rate term loans, base-rate-linked variable loans, asset finance and most invoice-finance products are not performance-related. Profit-share and revenue-based finance structures can engage the cap; flag the structure at quote stage.
Where do I check whether a lender will engage with my CIC structure?
Best practice: speak to the lender's underwriting team before submitting a full application. Most mainstream lenders (Funding Circle, iwoca, Allica) do not publish CIC-specific guidance but engage on a case basis. The Office of the Regulator of CICs publishes a list of CIC-friendly social-investment intermediaries; for grant-blended deals start there.
Reviewed by Oliver Mackman, Director. Last reviewed: 2026-05-07.