Two trade bodies have warned that “loan stacking”, where a business takes out several loans at once, threatens the “financial resilience of UK businesses” and poses “significant risks” to borrowers, with the Finance and Leasing Association (FLA) calling for industry action on the practice.
The FLA, a trade body for the asset, consumer and motor finance sectors, said a number of its members had reported “concerning trends in this area”.
Loans taken out this way are usually at high rates of interest and over short terms that can push a business into a debt spiral, according to The Times. An investigation by the newspaper in September found one small business stacked with 15 different funding facilities that had average interest rates of about 20 per cent.
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