Finance for freelancers is available if you know where to look

In the 2008 Pre-Budget Report, the Government announced that SMEs could benefit from up to £4 billion of EIB finance between 2008-2011.

The funds are accessed through intermediating national banks, which then lend the finance on a matched funds basis. In the first year the target was for UK banks to secure £1 billion of finance for SMEs from the EIB. This was achieved and banks have now secured a total of £1.39 billion from the EIB.

Ian Pearson, the Economic Secretary to the Treasury said: "Support for SMEs is key to driving growth in the UK, so I am delighted that small businesses are benefiting from this finance. This forms part of the Government's continued commitment to help SMEs access the finance they need to take their businesses forward, which is vital to our long-term growth strategy.

"I want to encourage all businesses to get in touch with their local banks to find out if they can get access to this funding; it is an easy process and certainly worth pursuing".

One problem with this scheme however is that more than a third of business owners had not heard of the scheme and of those that had, most saw no point applying as they believed they would be refused.

Meanwhile the RBS has promised £1bn of new loans to manufacturers at cut-price rates to meet Government lending targets. Banks have been under fire for failing to offer businesses credit at affordable rates and the Royal Bank says the new manufacturing fund would offer two-year fixed rates of 3.4% and three-year deals at 4.3%.

Lord Davies, Minister for Trade and Investment, said: 'This initiative is welcome and it really emphasises how manufacturing is critical to the recovery. We're still the sixth-biggest manufacturing economy in the world.'

Despite these measures there is still a feeling that the UK will become increasingly uncompetitive as fewer people are encouraged to start their own businesses.

As borrowing continues to be problematic, it is predicted that small business owners with financial difficulties may find themselves looking for financial assistance from their family and friends, as well as borrowing on personal finance such as credit cards. This depressing news emerged from a survey conducted by Graydon UK, a commercial credit reference agency, and the Forum of Private Businesses. Although the information was based on the 2009 survey, these issues are still prevalent in 2010 so it is likely that the same pattern will continue.

The survey showed that 28% of business owners felt that they had no option but to turn to loved ones for financial help due to the lending conditions adopted by the banks. A further 8% admitted using their personal credit cards.

40% of people who applied for finance from the banks in the second half of 2009 were refused. 52% were refused business loans and 28% had their request for an overdraft extension turned down.

Discussing the results of their survey, Graydon UK said this move towards accessing personal finance is having a direct impact on the growing number of insolvencies during the latter half of 2009.

Phil Orford, chief executive of FPB, said: "The continuing credit drought means more entrepreneurs are being forced to seek alternative sources of finance - including family, friends and personal loans. The latest insolvency figures show that this level of personal risk is unsustainable."

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.
Image: Facebook-Like: Don't Give Up by quinn.anya