borrowing a small amount without a bank

Not everyone wants, or can get, a loan from a bank. Some people have been turned down, some have no current account, and others simply prefer to deal with a community organisation or someone they know. There are legitimate ways to borrow a small amount outside the traditional banking system, but this is also where unlicensed lenders and loan sharks operate.

This page sorts the non-bank options into those that are regulated and often affordable, those that are legal but expensive, and those to avoid entirely. Mini-pret.com does not lend or introduce borrowers to lenders.

Who lends outside the banks

"Without a bank" can mean several different things. It might mean borrowing from an organisation that is not a bank, such as a credit union. It might mean borrowing without a bank account at all. Or it might mean an informal arrangement with family, friends or a community group. Each comes with different protections.

Credit unions

Credit unions are financial cooperatives owned by their members, who share a common bond such as living or working in the same area. In the UK, they are authorised and regulated, deposits are protected in the same way as at a bank, and the interest they can charge on loans is capped by law. Many specialise in small loans for people on modest incomes, and some offer loans to people receiving benefits, with repayments taken directly from their income.

You usually need to join first, and some ask you to save a little alongside the loan. Decisions can take a few days, but the cost is typically far lower than high-cost short-term credit.

Community lenders and supported microcredit

Community Development Finance Institutions (CDFIs) and social lenders aim to serve people that banks turn away. They often look at your whole situation rather than just your credit score, and some combine a loan with budgeting help. They are regulated lenders, so you can check their authorisation. Our page on social microcredit for low-income households explains this model in more detail.

Peer-to-peer platforms and private lending

Peer-to-peer platforms match people who want to borrow with people who want to invest. The platform, not the individual investor, should hold the authorisation and carry out the checks. Lending between private individuals outside a platform is a different matter: an occasional loan between friends is normal, but anyone who regularly lends money to the public for profit needs to be authorised. See our guide to small peer-to-peer loans between individuals.

Borrowing from family or friends

An informal loan from someone close can be the cheapest option of all, but money can strain relationships. A short written note avoids misunderstandings:

• the amount lent and the date;
• whether any interest is due (usually none);
• the repayment amount and dates;
• what happens if a payment is missed or circumstances change;
• signatures from both people.

Repay on time and talk early if you cannot, exactly as you would with a lender.

Non-bank options that are legal but costly

Pawnbrokers lend against an item you leave with them, such as jewellery; if you do not repay, they can sell it. Rent-to-own shops let you take goods and pay weekly, but the total cost can be far higher than the shop price. High-cost short-term lenders are also outside the banking system, and in the UK they are subject to an FCA price cap. These options may be lawful, but compare the total repayable carefully. Our small loan cost calculator guide helps you do that.

Help that is not a loan at all

Before borrowing, check whether you qualify for support that does not need to be repaid or carries no interest:

• a Budgeting Advance for eligible Universal Credit claimants, repaid without interest from future payments;
• local welfare assistance or hardship funds run by councils;
• charitable grants for specific needs, such as essential appliances;
• payment plans offered by energy, water and phone companies to customers in difficulty.

Advisers at MoneyHelper and Citizens Advice can help you find what you are entitled to.

Loan sharks and other red flags

Illegal money lenders often present themselves as friendly neighbours or community figures. They may lend without paperwork, then add charges at will, keep your bank card or ID as "security", and use threats or violence. Warning signs include:

• no written agreement and no clear total to repay;
• the debt seems to grow no matter how much you pay;
• a demand for your bank card, PIN, passport or benefit documents;
• offers made on social media or in person by someone who is not authorised;
• a fee requested upfront before you receive the money.

In the UK, you can check any lender on the FCA Financial Services Register. Dedicated illegal money lending teams work with victims confidentially, and debts from an illegal lender are generally not legally enforceable. If you feel threatened, contact the police.

Checklist for any non-bank loan

• Is the lender authorised, and does the Register entry match its contact details?
• Do you have a written agreement showing the APR, the total repayable and the schedule?
• Can you afford the repayments after essential bills?
• Is there a clear complaints process, and does the Financial Ombudsman Service cover the firm?
• Have you checked free and interest-free help first?

If you have no bank account, opening a basic account is worth considering: UK banks offer fee-free basic accounts for people who cannot get a standard one, and it makes many cheaper options available. For broader context, read our guide to small loan rules in Britain, and if you have been refused because of your credit file, our page on borrowing with a poor credit history.