THE MATHS
For twenty-seven months, we paid. Every month. On time. Without fail. The direct debit went out. The business kept going. We did what borrowers are supposed to do.
We weren't trying to game the system. We weren't hiding from our obligations. We were running a family business and honouring our commitments. Twenty-seven payments. Not one missed. Not one late.
When you make loan payments, you assume you're paying it off. That's how it feels. Money leaves your account, the debt gets smaller. But that's not quite how it works.
In the early years of a loan, most of your payment is interest. The principal - the actual amount you borrowed - barely moves. So we paid. And paid. And nearly half of everything we paid went straight to interest. We returned almost two-thirds of what we borrowed. We thought we were making progress.
Late 2024. The economic reality we'd been fighting finally won. We'd already used our savings to keep staff employed. We'd downsized. We'd cut every cost we could find. We kept paying Funding Circle even when we knew the end was coming. That final payment in October 2024 went out when we already knew. We were still trying.
And then it was over. The business entered voluntary insolvency. Eight years of building something - gone. Our livelihood - gone. Our savings - gone.
We expected consequences. We expected difficult conversations. We expected to face what we owed. What we didn't expect was the number.
A few weeks later, the "Defaulted Statement" arrived. We knew we'd owe money. The loan wasn't finished. We understood that. But then we saw the figure.
More than we originally borrowed.
We'd paid back almost two-thirds of the money. We'd handed over tens of thousands of pounds. And now they wanted *more* than we started with. How is that possible?
Funding Circle's demand has three parts:
1. Outstanding Principal The portion of the loan we hadn't yet repaid. This we understood.
2. "Contractual Interest" This is where it breaks down. According to Funding Circle, we owe interest for the remaining 45 months of the loan term. The months *after* the business failed. The months we didn't have the money. The months that never happened.
Their own words:
"Once the account defaults the interest is frozen, but the contractual interest is still due - this is the interest that would have been repaid should your business have maintained the full term length."
Read that again. They want interest that "would have been repaid" if we'd kept borrowing for six years. But we didn't. We couldn't. The business died after 27 months.
3. Collection Charge A fee of 10% of the outstanding principal, added automatically when you default. Does it cost 10% to send emails and make phone calls? We don't see how that relates to actual costs - it feels punitive.
Let's be clear about what this means. We received a loan. We paid back almost two-thirds of it. Nearly half of what we paid was interest - profit for the lender during the time we actually had the money. And now they want:
The total exceeds the original loan.
A family that paid faithfully for over two years, that returned the majority of what they borrowed, is now being asked for more than they started with.
We understand that lenders need to recover losses. A business failed. Money is owed. That's reality. But there's a difference between recovering a loss and claiming a windfall.
The outstanding principal? That's their actual loss - money they advanced that we haven't yet repaid. The "contractual interest" for years we didn't have the money? That's not a loss. That's profit they hoped to make. Profit from a loan that no longer exists. Profit from months that never happened.
Demanding it doesn't make them whole. It makes them better off than if we'd never struggled at all.
Numbers on a page don't capture what this did to us. We'd just lost everything. The business we'd built for eight years. The jobs we'd created. The future we'd planned. And then a letter arrives saying: actually, you owe us more than you borrowed.
It felt like being punched while you're already on the ground. It felt like the rules had changed halfway through the game. It felt like there was no way out.
We borrowed money. We used it. We paid it back faithfully until we couldn't anymore. We returned almost two-thirds of what we received.
Why do we now owe more than we started with?
We've asked this question. We've disputed the figures. We've tried to understand. The answer we get is: it's in the contract. But a clause in a contract doesn't make something fair. And we believe the law agrees with us.
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