With tough bank lending becoming an increasingly heated issue, many are turning to alternative sources of revenue – their friends. Over one quarter of British people have lent money to friends during the past year alone, according to a survey from the Post Office. And we are not talking small sums; the average was more than £500 each. Added together this makes an eye-popping total of over £7 billion – and this in a recession.

26% of people interviewed said they had lent money to a friend during the past 12 months, on average lending money to four different people, advancing an average of £133 to each one.

Just as importantly the survey revealed that less than half of the money lent during the past year has been repaid.

One in five said they had lent their friends more than they could afford, while 19% admitted they “could not even remember” how much they had advanced.

Comfortingly, 10% of people said they could afford to write off the debt as they did not need the money back.

Although people do not charge financial interest on money they have lent to friends, many do get something. Some are bought alcohol by the person they lent to as a thank you, while others do them a favour in return, or give them a kiss or a hug, or take them for a meal. Though £500 for a hug does seem a little high and this form of repayment is unlikely to catch on with commercial lenders.

As nominal as these repayments seem they are important. Over 40% of informal lenders may be reconsidering their friendships after getting nothing as a thank you. Of course it is an open question of whether this really worries the borrowers – the old saying about closing the stable door after the horse has bolted comes to mind.

Doug Strachan, director of financial services at the Post Office, said: “Understandably, millions of households across the UK have needed to tighten their purse strings as the recession has taken its toll, and with money hard to come by from many lenders, people can be thankful that they have such good friends they can rely on.

“Not only does this research show another side effect caused by the recession, but it highlights how people want to help others, outside of their immediate families, through tough times.”

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