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Credit conditions for self-employed still dismal

Small businesses and self-employed Brits are still having a devil of a time securing credit in order to grow their companies, according to the Bank of England.

The BoE said in a recently released research study that demand for finance is on the rise when it comes to small firms and the self-employed such as freelancers and contractors, yet the availability of finance is simply not matching this heightened demand. This is of course disastrous for the overall economic recovery since this means new entrepreneurs can’t get off the ground and start their own businesses while existing firms can’t expand and grow without working capital – and incidentally that means fewer workers being hired as well.

So this is how the economic recovery can be stopped in its tracks: SMEs can’t get the financial support they need to expand their operations, which leads to reduced capacity to do business and an even more reduced capacity to employ Brits looking for work. Fewer job opportunities means less money flowing into the hands of the average Brit, and that leads in turn to less money being spent in general – and small businesses bringing in less revenue as a final end result.

And who’s to blame for this slow but inexorable slide back into economic marginalisation? Why it’s the banks themselves, the greedy bastards that they are. In fact the Government has been trying to get better lending to businesses for years now to no avail because every scheme they try is simply perverted by financial lending institutions. Do you remember that Funding For Lending scheme a few years ago? FLS was an absolute bust because the mechanics behind the scheme – providing ultra low-cost wholesale lending to banks in the hopes they would turn around and then provide affordable rates on things like mortgages and business loans – were perverted by most banks. These lenders took the wholesale lending and then just sat on it, miserly offering only the best rates to customers with spotless credit. It was a total bust, and just one good example of how banks worked at cross-purposes to the Government.

So is there hope for the future? Damned if I know. It’s going to be rough for many businesses if they can’t gain access to finance. Hopefully the Government will come up with a scheme for lending that will bypass greedy banks and get the funding in the hands of those of us that need it the most!

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