Press Release: Business Owners Rely on Plastic

Recent research by on SME owners’ borrowing habits:
  • Nearly two out of five SMEs planning to borrow in next 12 months will use a personal credit card
  • Personal credit card is the most popular form of borrowing apart from bank loans, research shows
  • Average SME owner has invested £22,700 of personal cash in the past year
  • Peer-to-business lending actively used as an alternative for working capital

Business owners are putting their fund-raising plans on their personal credit cards for 2014, according to new research1 by fast-growing peer-to-peer (P2P) firm,

Its study shows nearly two out of five (37%) of business owners planning to borrow money or raise additional capital outside of traditional bank borrowing in the next year will use their personal credit cards to raise money. This compares with 12% who are looking to use P2P lending.

In total around 290,0002 SME owners will use their personal cards to raise cash with approximately 150,000 taking money out of personal savings. Similar numbers will be borrowing from friends and family in order to fund business expansion. Around 50,000 SME owners are remortgaging their own home while another 50,000 plan to sell their home or sell a second home.

However the research by shows using personal credit cards – where standard APRs for cash withdrawals can be as high as 29.9% – are the most popular form of personal borrowing methods. Using credit cards for long-term borrowing will also mean interest charges mounting up if business owners only make minimum monthly payments on their debts.

Its research shows SME owners are committing large sums of their own cash to businesses – around 56% of owners have invested some of their own cash in their business either to finance debt or support growth in the past year.

The average amount invested is around £22,700 – although the median amount that owners have invested is less than £10,000 in the past 12 months.

Daniel Rajkumar, Managing Director of said: “Using credit cards to fund businesses is not necessarily a bad idea if owners have plans to repay debts and clearly SME owners are willing to do whatever it takes to ensure their businesses stay on track. More often than not though, it is a quick fix and the hidden costs of a credit card can spring some nasty surprises.

“If more people had heard of P2P lending, we believe more would use it.

“56% of company owners have used their own money to support their company in the past year. They should consider a business loan instead and protect their personal finances – the regular repayments are easy to manage and all costs are revealed in advance. Credit cards can then be used for really short term borrowing, which is what they were designed for.” enables firms with at least two years of trading history to source growth capital at consistent interest rates, sometimes without asset protection from lenders looking for strong investment returns. Repayment terms range from six months to five years.

Daniel Rajkumar concluded: “Business owners might be surprised to know there is an online community of individuals and other businesses actively looking to lend to profitable UK businesses as an investment product, so the supply of funds is definitely there.” currently has around 350 active online individual lenders who have offered a total of around £1.5 million to British businesses. Lenders provide funding to SMEs on their own terms and as has lower overheads than banks and building societies, borrowers can refinance expensive bank products like credit cards and overdrafts, while lenders make a better return compared to traditional savings accounts. facilitates loans from £25,000 upwards and businesses must have at least two years of trading history and be profitable. For more details on its borrowing criteria, please visit

Research conducted by Consumer Intelligence among a representative sample of 401 UK SMEs between 12th and 19th December 2013

2 According to

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