News: Small businesses lose faith in banks and turn to payday lenders

peer to peer lendingA 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”.


Kasey writes about the latest small business and website news for bOnline. Find Kasey on Google+, or follow bOnline on Facebook, Twitter, LinkedIn and Google+

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