Brits lend to cover £4 billion business funding gap
More than 1.6 million Brits have lent money to friends or family members too aid business growth, according to new research.
By helping to bridge the gap in business funding they are placing additional pressure on their own finances, with ThinCats suggesting nearly £4,500 is lent on average.
The study suggests limits on lending are forcing entrepreneurs and business owners to look elsewhere, with up to £7.2 billion reportedly having changed hands in the UK in this way.
While parents are supporting the family lending trend, it was found that those aged 55 or over were nearly three times as likely to provide a loan as any other age group below them.
One in 20 in that age bracket had provided financial support to aid a business and it is suggested that the majority of the money lent comes from family members supporting each other in the early days of business.
It is suggested that around a quarter of loan applications to major banks were turned down in the last year with UK firms facing a shortage of finance in the region of £4 billion.
This can place some firms under severe financial strain and those unable to find solutions can be pushed towards administration and ending trading.
Alternative finance options do exist to assist those in difficulty, although they may not always be appropriate depending on the state of a business.
Peer to peer lending platforms have helped to reduce some of the lending gap, and have lent in the region of £3.4 billion since 2014.
The Government has also launched new initiatives to drive further growth, with one measure designed to get banks to point borrowers to alternative lenders if they are unable to support them.
More than 160,000 individuals have lent money through a peer to peer platform in order to help small businesses to overcome challenges.
By Phil Smith
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