A new report has revealed that microbusinesses (companies with 1-10 employees) have lost faith in the banks, instead resorting to alternative finance.
According to a study by Amigo Loans, over half (54%) of UK microbusinesses say they don’t feel it’s worth approaching their bank when they need funding for their business.
A quarter (25%) of respondents admitted to turning to a predatory payday lender to start up their business – up from 16% last year. Aside from start-up costs, 22% have taken out a payday loan to grow their business, while only 14% receive bank funding for this purpose.
James Benamor, founder of Amigo Loans, said: “Payday loan sharks needn’t be the first port of call for microbusinesses seeking funding; it’s essential they are aware of the safer and more cost efficient lending options available, such as credit unions, peer to peer loans and guarantor loans. We would like to see a not-for-profit, all of market comparison site for loans, which all lenders are forced to promote on their advertising”.