Are banks lending to freelancers?

The IoD surveyed 900 small business owners and discovered that 351 had applied for finance from a bank in the first half of this year. A third of these (117) were turned down.

Even companies who are lucky enough to get the go-ahead complain that they have to go to extreme lengths to obtain the money.

Almost 40% say that banks are requesting additional security and in some cases this has resulted in the boss putting up his home as surety.

These figures are better than those found last year when the banks rejected 57% of business loan and overdraft applications. They do however show that businesses and limited company contractors are still in a difficult situation.

A lot of firms want to borrow but the terms offered by lending institutions are so terrible that they do go ahead with the application and instead borrow from friends and family or max out on credit cards to get funding.

On Monday, the BBA revealed figures showing that net business lending by the banks is now at an all-time low. In May, net lending recorded the worst score (-£458m) since the BBA started the monthly report in October 2008.

Then on Tuesday, the BBA's chief executive Angela Knight, attacked the IoD for using dodgy statistics in the above report. She also said that its time to stop the blame game and called on everyone to take a more constructive approach to lending.

© 2010 All rights reserved. Reproduction in whole or in part without permission is prohibited.
Image: regret by SuperFantastic