For the last 5-6 months my friend has been getting payday loans through me (due to him maxing out/inability to apply) he has been paying up until this month. I have had to arrange a financial plan with the company so he can pay it over 3 months and now he claims he does not have to money. I have bank statements showing direct transfer to his bank from the company on all occasions and also texts where he states he will pay me back. Do I have grounds to sue? The amount is now at £2000
I don't know Small Claims pound limits, but sure, that is how you try to recover your money. It doesn't mean he will pay even if you win. The judge may award you the win easily enough, but you may also get a quick lecture on loaning money to someone who has already proven he doesn't repay loans.
Yes, you need to stop loaning money if you have not already, and the issue with payday loans, unless they borrow less and less each payday, they just get further and further in debt as more and more interest is due