Colin addresses the rise in small business overdrafts in Yahoo! Finance
Thursday, September 25, 2025 at 12:59 PM GMT+1
LaToya Harding
Rise in business overdraft applications
The number of sole traders, solopreneurs and micro business owners applying for overdrafts has shot up, new data has shown.
Experts said it “could be a significant red flag” and that “it is a recipe for disaster with more tax rises forecast in the upcoming budget”.
Jim Tannahill, managing director at London-based Suttons and Robertsons, said: “we’re seeing a marked increase in sole traders and solopreneurs using luxury jewellery, watches and gold to unlock short-term cashflow”.
Among businesses with no employees, such as sole traders, freelancers and micro businesses, there was a significant increase in applications for a bank overdraft facility in 2024 compared to 2023 (45% in 2024 and 30% in 2023), according to official survey data published this morning.
The Department for Business & Trade survey also found that around 12% of businesses with no employees sought external finance in 2024, an increase on 2023 (8%) and 2022 (7%). This was the highest level since the survey began in 2015.
Also in 2024, the survey found that 27% of businesses with no employees reported growth in annual sales (turnover) over the preceding 12 months, a decrease compared with 2023 (32%) and 2022 (35%). A higher proportion of businesses with no employees (32%) reported a fall in turnover during this period (31% in 2023).
Colin Crooks MBE, CEO at London-based business consultancy, Intentionality, said “the rise in business overdraft applications could be a significant red flag”.
He added:
“Yes, an overdraft is often the most sensible solution for solopreneurs facing fluctuating incomes. After all, you only pay as you use the overdraft, whereas a loan is a constant cost.
“However, it’s clear from my work with solopreneurs, and this data on increased applications, that incomes are static while costs are rising. Solopreneurs are natural optimists who hope for an upturn, but in the short term, they need cash flow solutions. The real answer isn’t more debt, it’s getting more customers.”