Self-employed professionals are calling for better access to mortgages, a ban on personal guarantees and more retirement support.
This will lead to more people willing to launch their own small businesses.
That’s according to two recent reports published by the Federation of Small Business (FSB) looking into how to improve the self-employed’s access to finance, pensions and mortgages.
The research shows that 25% of entrepreneurs have found it more difficult to get a mortgage and those who have managed to succeed find they are often faced with higher rates and less favourable terms.
Looking at what has been described as ‘harsh’ personal guarantees, the report highlights the excessive use of them is resulting in stifled business growth – an issue the FSB is raining with the Financial Conduct Authority (FCA).
The report also found that many self-employed professionals are struggling to make saving for a pension a priority due to other financial issues – 37% said they don’t contribute to a pension because of cash flow constraints.
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Tina McKenzie, FSB’s Policy Chair, said, “People who decide to take a leap into the unknown by embracing entrepreneurship are taking on many risks – not least that of no longer being able to rely on a secure income.
“Income volatility adds additional barriers to accessing finance products, such as mortgages and external finance for their business, and makes saving for a pension harder.
“The impact of this should be minimised to encourage more people to take the leap without worrying that they will be locked out of common financial milestones as a result.
“The dream of owning your own home is firmly entrenched in our national culture, while we all aspire to a comfortable retirement – but these things should not be a privilege reserved for those in conventional employment.
“Keeping Business Asset Disposal Relief at 14 per cent could help entrepreneurs avoid erosion of their retirement funds.
“As the Government develops its Small Business Strategy for publication later this year, it must cater to the needs of the self-employed. Getting this right will enable entrepreneurs to do what they do best – innovate, adapt, and create.
“By solving the finance conundrum too many entrepreneurs find themselves in, we can help to unlock the growth we need to get the economy on track.”
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