The FCA has launched a probe into the increasing demands for personal guarantees from bosses when lending to small businesses (SMEs).
Following up on a super-complaint from the Federation of Small Businesses, the watchdog said it has concerns that personal guarantees dissuade business owners from borrowing to grow.
As part of the investigation, the FCA will collect data to understand the personal guarantees in place for companies borrowing less than £25,000.
What levels of guarantees are required and how complaints are handled will also be looked at, said the regulator.
Sheldon Mills, executive director of Consumers and Competition at the FCA, said: "Small businesses are vital to the UK economy, and it is important that they can access lending to help them grow – so we welcome the FSB raising these issues.
"We will play our part to better understand whether lenders’ practices are causing unnecessary barriers to growth and, if necessary, act to remove any within our remit.
"That remit, set by Parliament, is limited when it comes to small businesses. If we identify issues outside our remit, we will make these public so that Parliament and policymakers can consider whether greater protection should be available to small businesses."