Season’s spending
As small to medium enterprises continue to struggle to make money in the tough economic climate, George Osbourne has offered a helping hand. The Chancellor of the Exchequer has announced that loans totalling 4bn will be used to help struggling businesses.
While 80 per cent of those borrowing to finance Christmas are confident of paying it back within a month, 7 per cent admit they could still be clearing the bill in June next year, according to the R3 poll. It also found that one in ten people in Scotland fear they won’t have enough money left over after Christmas to pay their bills at the end of this month.
The money will come directly from tax payers and will be used as the treasury moves towards a plan of ‘credit easing’ as more tax money is used to help smaller businesses struggling to make any profits. Alternatively, the banks have suggested a scheme in which the treasury would contribute approximately 800 million and the banks contribute the rest of a suggested 4 billion, but final figures are yet to be announced.
The loans come out of necessity as much as anything. Loans to SMEs were at an all-time low in the previous months. The figures show that from July to September, money lent to small companies dropped by 8 per cent, making life unbearable for business owners trying to stay afloat.
Banks had previously promised to help out small firms but have since taken a U-turn on that statement, failing to lend the money they said they would. Targets were set by the government to banks as an outline of the money they should be lending, but figures show that the top 5 banks were around 1bn below the target set out.
Further private investor plans to help boost the economy in areas like infrastructure and properties are to be put forward on the 29th November and will be a major part of a new mini budget aimed at creating better economic growth in the next sector.
“Fewer people than last year, across the board, have borrowed money but there are still some weeks until Christmas. With unemployment figures up, we can only expect to see more people saying they are struggling to afford the demands of the festive season,” said Hall. His concerns appear to be borne out by online payday lender Ferratum, which yesterday reported a significant increase in applications for its “microloans” as Christmas nears. Ian Porter, UK sales and marketing Manager at Ferratum said: “We are already seeing a significant increase in applications for our microloans and we still have three weeks to go until Christmas Day.”
Michael Fielding writes articles on behalf of Ferratum, who provide short term loans and Pay day Loans to those who are in need for a cash boost and tie them over until payday.
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