The vast majority of small businesses are refusing to seek credit through controversial payday and short-term lenders, research by BDRC Continental has suggested.
The market research firm indicated that only 6% of businesses surveyed would consider such a lender, as more than nine in 10 said they would reject payday and short-term lenders even in spite of the tricky lending environment.
As it has been reported that some lenders have offered short term loans at an annual interest rate of up to 180%, most small companies are being put off by the extremely high cost of the debt and the poor reputation such lending firms carry.
Spokesman for BDRC, James Dunleavy, said of the research, “Despite the tough economic climate, it’s clear that small businesses do not appear interested in using a short-term fix to the long-term challenge of financing their business.
“In reality, there are signs that payday lenders may have misread both the appetite and need of SMEs for additional finance on any terms”, he concluded.