Three in ten small businesses receive financial support from family members
New data shows that three in every ten (29%) small business owners in the UK have received financial backing from a family member – with three-quarters (74%) saying it was essential for setting up their business.
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 (36%) said they had received more than £25,000 from their relatives, with a fifth (19%) receiving over £50,000.
iwoca’s study with 500 SMEs found that the reasons they had financial backing from their family were diverse. A third (35%) asked family members for support because they needed the funding urgently, and a sixth (16%) said they couldn’t afford loan repayments, while one in ten (12%) either had their funding application rejected by a bank or the bank’s financing terms didn’t work for their business.
Despite one in ten (9%) small business owners admitting that their relationship with their relative had worsened due to becoming financially involved in their business, nearly half (47%) say it has led to improved relations.
In the future nearly half (47%) of small businesses predicted that they would prefer to go to a bank for financing, but a third (29%) would still opt to raise the money from family members.
ark 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.”
