From parents to grandparents, siblings to partners, iwoca, one of Europe’s largest small business lenders, found that family support can be crucial in launching a small business.

Over one-third (36%) of these owners received more than £25,000 from relatives, and a fifth (19%) received over £50,000.

Iwoca’s study of 500 SMEs found diverse reasons for seeking family financial support: a third (35%) needed urgent funding, a sixth (16%) couldn’t afford loan repayments, and one in ten (12%) either had their funding application rejected by a bank or found the bank’s financing terms unsuitable for their business.

Despite one in ten (9%) small business owners admitting that their relationship with their relative had worsened due to becoming financially involved in their business, nearly half (47%) say it has led to improved relations.

In the future nearly half (47%) of small businesses predicted that they would prefer to go to a bank for financing, but a third (29%) would still opt to raise the money from family members.

Mark Di-Toro, Director at iwoca, said: “Time and again data shows that the major banks are reducing their appetite to lend to small businesses, meaning they’re increasingly having to look for finance elsewhere.

“This means families have also been filling the gap. From parents to grandparents to brothers and sisters, millions of small business owners are seeking the support of their families to help get their businesses off the ground.”