The growth in the personal loans market, a staggering 30%+ in 2015 alone in the UK, is indicative of the need for easier access to money. As the cost of living increases, and wages and salaries increase in very slight increments, people are less able to keep up with the financial demands of life, and it has become evident that something needs to shift.
One of the key economic areas where growth carries the most potential is in the small and medium business sectors.
The challenge for business entrepreneurs is getting finance for their business ventures. The money-lending market and financial institutions consider small businesses to carry the highest risk, because so few small businesses survive beyond the first 5 years of existence.
Ironically, one has to consider that perhaps, if they had access to finance for their businesses, that was not necessarily ‘cheap’ finance, but was ‘patient’ finance, in that the lender was willing to wait a longer term for repayment, this could stabilise this sector, and boost the growth.
One of the key benefits to growth in this sector is that this is the area of the economy most likely to employ more people when it grows.
An increase in the number of people in the working world would, of course, generate more taxes for government, and more income being dispersed back into the economy.
It would seem that this is a simplistic view to take of an economic issue which, of course, has many facets that need to be considered, yet, in these very simplistic terms, it certainly comes across as a way to boost the economy with real results and positive effects in the relative short-term.
Globally, many financial institutions have floundered since the world slump in 2008, and some have even not survived.
For those who were willing to re-invent themselves to a large extent, and re-look at the working population that were on the fringes of having access to borrowed money, and setting new and more accessible parameters, with higher interest rates to mitigate the risks, they have seen exponential growth and substantial increases in profits over a reasonably short period of time.
It has also seen new financial institutions emerging, as the micro-lending sector is less regulated by government, in terms of the interest that can be charged on lent money, so establishing a money-lending company is a viable business option to those who have the funds to do so.
This industry is not without its challenges, but it has support industries that are thriving alongside it because they are key to the success of these companies. An example of such a support industry would be the Information Technology and Online Security companies. It is of utmost importance that people borrowing money through the internet know they are doing so safely, without the risk of identity theft or fraud, using their personal information.
So, it would seem that taking a fresh look at ways for small business to borrow money from the loans market in the UK would be conducive to growth and sustainability of the economy for the medium to long term.