Micro-businesses no longer relying on banks

Freelancers might think that banking apps can help their one-person venture thrive, but it seems only a few of them need anything from their bank to get their business off the ground.

In fact, almost half of micro-businesses (44%) did not require any funds to launch their enterprise and almost as many (43%) used only personal savings to do so, found FreeAgent.

The cloud accountancy firm said that just two per cent of such traders traced their existence back to a secured bank loan, making only government schemes (1%) less popular.

The findings, which include the four per cent who turned to friends or family for a loan, should help dispel the myth that poor access to finance is keeping creatives from going into business.

“A major barrier for people thinking about starting a business can be the costs involved,” said Ed Molyneux of FreeAgent, who set up his firm in 2007 and which now employs over 100 people.

“They think they’ll need to spend a lot of money from the outset on building the right infrastructure for their business, and the idea of applying for bank loans, grants or other financial assistance is very unappealing.

“But the reality is that the majority of UK micro-businesses don’t actually require this kind of investment from the outset,” he said. “That’s a trend that should give confidence to anyone contemplating self-employment.”

 

30th August 2016

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