Paper

Micro-lending for Enterprise in the UK

Does microfinance meet the needs of micro-entrepreneurs in the UK?
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This report provides an overview of micro-lending in the UK, covering both the need for microfinance and the nature of the organizations that provide it. The first chapter looks at the growth of microenterprise in the UK, setting the context for a closer look at needs for financial support among this group. This chapter discusses:

  • Characteristics of micro businesses;
  • Characteristics of micro-entrepreneurs;
  • Government initiatives to encourage self-employment and micro businesses.

Chapter two assesses the needs for both start-up and expansion finance among micro-firms in the UK. It shows that:

  • The most widely used financing source for start-ups have been personal savings;
  • This is followed by bank loans and overdrafts;
  • Help from family and friends comes as the last resort.

Chapter three looks at the various sources of funding for micro-enterprise that currently exist in the UK. This chapter discusses:

  • The role played by bank finance;
  • Small Firms Loan Guarantee Scheme;
  • Enterprise allowance and business start-up schemes;
  • Soft loan schemes.

Chapter four presents a detailed scenario of commercial finance for micro-entrepreneurs. In particular, this chapter provides an analysis of the problems faced by this group in obtaining access to bank finance.The final chapter looks at the micro-lending initiatives in the UK, and the extent to which they meet the needs of micro-entrepreneurs. The conclusion is structured along the following:

  • Status of micro-lending in UK;
  • Competitive edge of micro-lenders over traditional banks;
  • Growth support to micro-lending in UK.