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Microbusinesses turn to payday loans for funding as faith in banks declines

Your Money, 16 Feb 2014

A quarter of UK microbusinesses have turned to payday lenders to fund their start-up, up from 16% this time last year, research has found.

The study by Amigo Loans revealed that more than half (54%) of microbusinesses - companies with 1-10 employees - think that approaching a bank for a loan is a waste of time.

In the last year alone, one in five (22%) has taken out a payday loan to grow their business, while just 14% received funding from their bank.

A fifth (21%) of microbusinesses said it was not worth approaching the bank because they will refuse to lend to them and a third (33%) said alternatives currently on the market are quicker and easier to receive funding from.

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