The England Illegal Money Lending Team (IMLT) is urging business owners to beware of the risks of borrowing from illegal lenders, as part of its support for this year’s Business Finance Week.
The IMLT has seen business owners targeted by loan sharks when seeking funds to start or expand their ventures and it wants to raise awareness about the risks involved.
Business Finance Week, organised by the British Business Bank, runs from September 30 to October 9, offering free online and in-person events to help businesses understand the range of finance options available.
As part of its support for the week, the IMLT wants to make sure business owners know how to spot the signs of an illegal lender and know how to get help if they have borrowed from one. It has funded a new short video to explain how it can help businesses, and when it can’t step in. That can be viewed here: www.youtube.com/watch?v=hWcCpCTiDds
Dave Benbow, head of the IMLT, said: “Whether they are just starting out, looking to expand or dealing with unexpected expenses, business owners may need to borrow money at some point in their journey. But wherever someone is in need of money, illegal lenders are ready to strike.
“But it can be a complex area, and we know wherever someone is in need of money, illegal lenders are ready to strike. Businesses can be targeted just like individuals are and we want to make sure they know the risks, know how to avoid illegal lenders and know where to get help if they have borrowed.”
The IMLT is a national team hosted by Birmingham City Council that was set up over 20 years ago to investigate and prosecute loan sharks and support borrowers. As well as supporting individuals who have borrowed, it can also help businesses, in certain circumstances.
The IMLT can step in to help as long as the loan is under £25,000 and used for business purposes and the business is structured as a sole trader, a partnership with fewer than four partners, or an unincorporated association.
Loans exceeding £25,000 for business purposes are considered exempt agreements and fall outside the IMLT’s jurisdiction and it cannot investigate loans made to limited companies. The £25,000 limit does not apply to personal loans.
The IMLT, also known as Stop Loan Sharks, has supported business owners in the past such as Paul, a 42-year-old father who needed a loan to start a clothing business.
His friend said she knew a man who had a money-lending company and he took out a business loan of £20,000.
Sadly, his business failed and only then did Paul realise that the lending company did not have a licence. When Paul struggled with repayments he was threatened, being told that his debt had been sold on. He then discovered he was expected to pay an extra £4,000 in interest. Investigations into the case are ongoing.
Illegal lending is a criminal offence. Illegal lenders are unregulated and give loans with no paperwork, charging high interest rates and adding charges. They can resort to threats, intimidation and even violence if repayments are not made. Borrowers do not have the protection of consumer law such as cancellation periods and the ability to apply for help if they can’t pay.
To find out more about Business Finance Week, visit https://www.british-business-bank.co.uk/news-and-events/events/business-finance-week
Anyone who thinks they have borrowed from an illegal lender is urged to call Stop Loan Sharks for confidential advice and support on its free 24/7 helpline 0300 555 2222. For more details, visit stoploansharks.co.uk.
