New data shows that three in every ten of the UK’s small business owners have been given financial backing from a family member – with three-quarters saying it was essential for setting up their business.
And it’s suggested that the trend is based on a reluctance by banks have a weakened appetite to lend to small businesses.
From parents to grandparents, siblings to partners, new data from iwoca, one of Europe’s largest small business lenders, finds that families can be a significant contributor when a small business gets off the ground.
Over a third said they had received more than £25,000 from their relatives, with one in five receiving over £50,000.
iwoca’s study with 500 SMEs found that a third (35%) asked family members for support because they needed the funding urgently; a sixth because they couldn’t afford loan repayments; and one in ten either had their funding application rejected by a bank or the bank’s financing terms didn’t work for their business.
Mark Di-Toro, Director at iwoca, said: “Time and again data shows that the major banks are reducing their appetite to lend to small businesses, meaning they’re increasingly having to look for finance elsewhere.
“This means families have also been filling the gap. From parents to grandparents to brothers and sisters, millions of small business owners are seeking the support of their families to help get their businesses off the ground.”
