£5.7m in Small Business Loans Withdrawn Every Day
Small enterprises made 741 complaints to the Ombudsman over bank loans and overdrafts last year
Small business’ bank overdrafts and loans have been withdrawn – many without warning – at the rate of £5.7m a day since 2011, new research by Funding Options has found.
Yet the report found that entrepreneurs are fighting back, with 741 recorded complaints about bank finance made by small businesses to the Financial Ombudsman Service in 2014 alone.
The research showed that more small and medium enterprises are also choosing to move away from traditional funding to alternative finance routes – up 43% to £76bn in 2014.
Furthermore the report indicates that the complaints are not a full reflection of the scale of the problem as it’s only smaller and micro-businesses who are speaking out; firms with 10 or more employees or with a turnover of more than €2m are failing to file complaints.
The news comes after a report by Advanced Payment Solutions revealed 60% of small firms don’t have a business account with a high-street bank due to complexities encountered by those who have tried.
Conrad Ford, CEO of Funding Options, commented:
“That’s one of the drivers of alternative finance becoming increasingly mainstream. We are seeing more and more small and medium enterprises exploring their alternative finance options after having their overdrafts withdrawn unexpectedly.”
“There is still a knowledge gap among a lot of small businesses over what kind of alternative finance might be best for them. The British Business Bank’s referral scheme could bridge that gap virtually overnight if it is implemented in the right way.”