Small Business Advice

One million sole traders rejected by high street lenders

25 Feb 2016

More than one million sole traders in the UK have had their applications for business financing rejected by high street lenders, according to new research from Amigo Loans, but many are unaware of alternative financing options.

Alternative finance

Despite a wealth of alternative financing options in the UK, such as equity crowdfunding, gift crowdfunding and invoice factoring, 42% of the sole traders surveyed instead turned to overdrafts to fund the growth of their small business, even though the cost of overdrafts in the UK has risen by 500% in the last seven years

Sole Trader S Tools

These findings suggest the alternative finance industry needs to do more to make small business owners aware of the many alternative forms of funding available to business owners in the UK. In fact, a recent report from GLI Finance and Cambridge University’s Centre for Alternative Finance suggested the lack of awareness of alternative financing options amongst SMEs in the UK could be costing the British economy as much as £20 billion.

Challenger banks

Challenger banks also represent an alternative for startups and SMEs in the UK, and have been helping to bring renewed competition and choice to a traditionally monopolistic banking sector. However, George Osborne’s recent decision to replace the bank levy with a new 8% profit surcharge could gradually erode this option for small business owners, with the Financial Times suggesting we could see “a £6bn reduction in lending to small and medium-sized businesses” by challenger banks as a direct result of Osborne’s surcharge.

Self Employed Entrepreneur 2

Friends and family

Beyond traditional and alternative financing options, 40% of the entrepreneurs surveyed indicated they received funding for their small business from family members, while a further 30 percent turned to friends for working capital.

Not starting up

However, the survey also revealed that around one in twenty sole traders did not explore any other avenues of funding for their enterprise after being rejected for traditional financing, with as many as 73,000 deciding not to launch their new business at all.

Keir Wright-Whyte


Managing Director

0207 043 4000

About the author

Originally graduating with a degree in geography from Edinburgh University, Keir claims that he was then tricked into becoming an accountant by one of the UK's top 5 accountancy practices.The deception extended to the usual training in audit and associated activities.

Keir subsequently worked in a number of advisory roles with clients including in the energy trading, pharmaceuticals and financial services sectors.

He loves working at Accounts & Legal because of the variety of work and clients, the excellent team ethos and morale, the importance placed on genuinely helping and being useful for clients and because he believes what he does matters to clients and helps the firm.

Keir's primary role is to ensure that new clients with complex businesses or needs are on-boarded in the best way and he is a "trouble shooter" both for clients and where complex issues arise internally. He also helps the accounting teams strive to improve what we do for clients, whether processes or services.

When not debiting or crediting, Keir has a penchant for fixing old buildings, skiing, surfing and cycling.


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