According to recent reports in the financial media, Britain’s banks are now approving 80% of small business loan applications, which should come as good news to limited company contractors and sole traders.

The British Bankers’ Association believes that this will encourage more SMEs to seek financial assistance from the banks rather than relying on short term cash reserves to finance the expansion of their business.

Stephen Pegge, from the BBA, said that lending to SMEs is one of the most important services that banks undertake. The current low lending rates mean that enterprises benefit from average interest rates less than half of those in force two years ago. He also suggested that a perceived credit squeeze had been putting enterprises off applying for business loans.

Small businesses are now cautiously optimistic that the economy will return to normality but many believe it will take up to 2 years before that happens.

A survey recently undertaken by Easynet Connect found that 58% of respondents think the economy will not improve significantly for another 12 to 24 months, whilst 29% have delayed their business plans until after the upcoming election.

The proposed hike in employer’s national insurance is still a major worry to many businesses, including umbrella companies, who employ workers on a mass scale. The Tories have once again confirmed this week that they will scrap the increase in NIC if they win the election. They have however refused to rule out a rise in VAT and their headline grabbing ‘review’ of IR35 may still come to nothing.

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Image: show me the money.. by jameschew

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