Most freelancers no longer rely on banks for financing their businesses

Wednesday 21 September 2016

Financing a business is one of the key components one must consider when starting a small business, but for some this is not of much concern.

Owing to the nature of businesses nowadays, most creative freelancers do not need to rely on a bank loan in order to fund their enterprises. Most of these professionals work in specific sectors - public relations, media, journalism, marketing, advertising, and art and design - conduct their tasks using the internet and digital media tools, so a lot of them do not need to pay much money except for internet connection.

These days, many creative freelancers - especially the so-called ‘millennials’ working in the digital, creative and media industries - have various resources available, such as contacts and connections made through networking events and internships, the internet and social media. Through these sources, it is easy to build up a client and consumer base.

According to Freelance UK, 44 per cent of micro-businesses did not require funds and 43 per cent of those who had launched their own enterprise had used their personal savings. Only two per cent had used a secured bank loan, and four per cent borrowed from friends and family.

“A major barrier for people thinking about starting a business can be the costs involved,” said Ed Molyneux of FreeAgent, which also conducted the research. For many of those who choose to go down the route of self-employment, the idea of applying for and taking out bank loans or seeking out other means of financial assistance is very unappealing, so the ability to pursue an enterprise with little or no costs seems to be the way forward.

Being self-employed means that one can avoid unnecessary costs and expenses such as paying for the daily commute during rush hour, so if they can save on costs when starting up the business then that seems like the better option.

By Victoria McDonnell

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