Cash flow problems are forcing some businesses to resort to using pay day loans to help short term.
Traditional lenders such as banks have been criticised for not supporting small businesses during the recession. The government has tried to step in and made some funds available.
In a desperate attempt, some businesses are relying upon payday lenders to help them out.
“Pay day loans are an incredibly expensive means of finance and only put off the problem for a further month.”
Cash Flow Problems And Pay Day Lenders
The problem with payday loans is that they simply put off the problem of cash flow for another month, with the problem becoming larger.
It is better for businesses to take other steps to try to avoid cash flow problems in the first place.
Soon, the Financial Conduct Authority will take over regulation of payday lenders. It will introduce new measures such as limiting customers to roll over loans only twice. It will also be introducing cap on interest and charges.
Payday loans should only be used as a form of last resort and efforts should be made to improve cash flow by other means.
