Do freelancers have easy access to finance?

According to the British Banking Association up to £27 million worth of loans are granted to self-employed freelancers daily.

In June, 11,000 small businesses received new loans totalling £598 million, a rise of £70 million on the previous 2 months, but down by £269 million on the corresponding month last year. The statistics director at the BBA pointed out that in the past 12 months almost £7 billion in long-term loans were approved.

James Mallick from Top Gear Recruitment thinks that this reluctance on behalf of banks to lend to SMEs could have an adverse effect on Britain's economic recovery. A taskforce has now been set up with the government to investigate ways the banks can help to rebuild our economy.

Mallick pointed out that SMEs and limited company contractors need to be able to get their product to market in order to increase consumer confidence. He acknowledged that there may now be more businesses that are thought of as a credit risk due to the recession but if the banks continue to withhold funding then the situation will get worse. He would like to see the coalition apply pressure on the banks to increase lending.

This view is shared by Matthew Goodman of the FPB who said that research they have carried out confirms that the granting of loans and overdrafts have decreased since the beginning of June at just the time when SMEs need access to more finance so that they can expand.

Meanwhile, the FSB has warned that freelancers will be forced to pass on the increased VAT costs to their customers when the government increase to 20% takes effect next January.