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Business owners 'turning to family' for loans

Business owners 'turning to family' for loans

Category: Loans

Updated: 20/02/2009
First Published: 20/02/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Small business owners have been found to be increasingly relying on family and friends for unsecured loans.

Research by Close Invoice Finance has revealed that six times as many Britons are providing finance for small and medium-sized enterprises (SMEs), compared to a year ago.

More than 540,000 such companies have turned to loved ones for help, as confidence that banks will provide credit has diminished.

While nearly three-quarters of owners believed financial institutions would give them credit last year, just six per cent of those questioned gave the same response this time around.

Chief executive of Close Invoice Finance David Thompson remarked: "With banks now closing their doors to SMEs, owners are relying on friends and family for financial support, placing immense pressure on these most precious relationships."

A recent study by PayPal showed that Brits provided loved ones with nearly £17 billion worth of unsecured loans in 2008, with half of adults polled saying they had lent some money.

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