A recent report by guarantor loans company Amigo Loans has found that the average micro business will need around £2,143 to set up their business. Many of these businesses find it very hard to get funding, with only 20% getting funding through a bank loan and a sixth have resorted to “more dangerous alternative methods” such as payday loans.
50% of the 200 micro-businesses surveyed believed they would need more funding to expand their business, but only 1 in 10 believed they would qualify for a bank loan and 14% felt they would be forced to use a credit card or overdraft facility.
James Benamor, founder and CEO of Amigo Loans, said: “Banks have forgotten why they exist. It’s scandalous that, despite billions of pounds worth of taxpayers’ money being given to them, they’re not lending to these entrepreneurs who are the life blood of our economy.
“For many small business owners, once they’re turned down by their bank they’ll have to try and find the money elsewhere or resort to extreme measures such as taking out a payday loan.
“For this to change there has to be greater awareness of the alternative funding options available – whether that’s guarantor loans, peer-to-peer or crowd funding, so that small business owners don’t feel forced down a route which could jeopardise their whole business.”
Are you a Micro business? What has your experience been of getting funding?
To be the first to receive news and other content from Gradwell, sign up below.