Over one million business owners left out in the cold by lenders
Press Release - 16 Febuary 2016
- 30% of sole traders have at some time been refused credit by mainstream lenders in the past
- 40% of entrepreneurs turn to nearest and dearest in search of funding
- One in 20 start-ups never make it because of access to funding
New research from Amigo Loans reveals over one million1 sole traders have been given the cold shoulder by mainstream lenders, with nearly a third of one man bands admitting they've been turned down for a loan.
Of those who have been refused, a quarter think they would have a better chance seeking funding by asking a stranger on the street, with a quarter preferring to look down the back of the sofa!
The survey of 500 sole traders found that when refused credit, entrepreneurs are turning to their nearest and dearest for financial support. Two fifths (40%) turn to family and almost a third (30%) look to their friends to give them a helping hand.
Despite support from loved ones, a worrying two fifths (42%) of business entrepreneurs are also dipping into their overdraft to fund their aspirations. This comes despite the fact authorised overdraft fees have hit record highs this summer as the banks introduce new usage fees. These fees have forced the cost of using an overdraft up to six times that in 20092 with the typical cost of an authorised overdraft now £140 a year. If the overdraft isn't authorised this can be substantially higher with charges of up to £353 for each payment made.
However, what is perhaps more alarming is that over 1 in 20 business start-ups which have been turned down by mainstream lenders didn't look anywhere else to support with funding. This means nearly 73,0004 potential businesses may have simply faded away because they haven't been able to access the funding they needed.
Glen Crawford, CEO of Amigo Loans, commented: "It's a disgrace that the people who keep our society operating, the mobile hairdressers, the wedding photographers, cleaners, cafe owners, mechanics, driving instructors and a whole host of other ambitious sole traders are being alienated by banks –the bankers have forgotten why they exist."
"Whilst some responses may be tongue in cheek, our findings outline the clear lack of confidence people have in high street lenders. At Amigo we have the flexibility to lend to microbusinesses because of the way we lend. If a borrower's family and friends trust them and they can afford the repayments, we'll support any business. We have already helped over 6000 businesses across the UK"
- 3,966,000 business in the UK with no employees – 30.6% have had a business loan turned down by a mainstream lender http://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN06152#fullreport
- Moneyfacts research detailing overdraft costs - http://moneyfacts.co.uk/news/banking/overdraft-fees-at-a-new-high--so-be-on-your-guard/
- Moneysavingexpert summary of overdraft charges - http://www.moneysavingexpert.com/banking/bank-charges-compared
- Of the 1,213,596 lone business that have been turned down, 6% didn't turn anywhere else for money – 72,816 businesses
- Kelly Davies, Amigo Loans - [email protected]
- Adam Smith, Teamspirit Public Relations - 0207 360 7878 [email protected]
- Ellie Pocock, Teamspirit Public Relations – 0207 360 7878 [email protected]
About Amigo Loans
- Amigo Loans is the UK’s largest guarantor loans company, offering medium term loans over terms up to 7,000 for up to five years.
- Amigo Loans assesses every borrower and guarantor during financial review session. All incomings and outgoings are reviewed and checked against national averages, as well as their credit file. Any discrepancies are challenged and any future budgeting is also accounted for.
- Amigo Loans APR is 49.9%.
- Amigo Loans has lent to over 170,000 customers over £610 million.
- Amigo Loans is one of the cheapest alternative loans providers in the market with highly transparent rates that are easy to understand.
- Amigo Loans offers an alternative way of borrowing money for people with bad credit, or can’t access credit through the banks.
- Amigo Loans works on the basis of trust to offer loans using friends and family as guarantors.