Yesterday Chancellor Alistair Darling announced the pre-Budget report 2009, the results are available on the HM Treasury website. Overall the measures were positive and encouraging for small businesses. The focus was on freeing up cash and providing access to credit, which is exactly what small businesses need right now.
Below are the key outcomes that will impact small businesses.
1. The Enterprise Finance Guarantee scheme has been extended by six months to September 2010. This scheme guarantees 75% of loans to small businesses with a turnover of £25m or less, allowing start-ups to get moving while established small businesses can consider expanding and investing. So far this scheme has already supported 6,500 firms with offers of loans totalling £660m.
2. The time to pay scheme which allows small companies to spread tax payments over a longer period of time has been extended indefinitely. This scheme has been helpful for businesses trying to free up cash in the past year. 150,000 businesses have already deferred £4bn of tax in the past year as a result of the scheme and this extension now allows further small businesses to take up this opportunity and invest the available cash in new projects.
4. Finally, the National Investment Corporation that has been established specifically for small and medium sized businesses which is to be funded with £500m of contributions from banks and financial institutions will be welcomed by small businesses who need access to capital.
Overall this year’s pre-Budget report is good news for start-ups and small businesses. It’s a step in the right direction and demonstrates that the Government recognises that small businesses are a driving force in steering Britain out of the recession and that it is crucial they have access to much needed funding. Although the Government has taken action on this, these are only baby steps and there remain issues still to be addressed such as the 1% rise in National Insurance by 2011.
And looking at VAT - the planned 17.5% VAT change remains the same and will be enforced as planned despite the fact that the impact of this change on small businesses is much more complex than simply adding 2.5% to their prices and fees. For many, the administrative burden and the confusion amongst customers remains a big issue and could see businesses choosing to absorb the increase rather than passing the cost onto their customers. We’re conducting a survey on this issue, so if you’re a small business let us know your plans by voting here where the poll is posted on the left side of the homepage.
So, while we’re on the right road to recovery and support for small businesses is welcome, there’s still some way to go and small businesses will be still treading lightly and tightening their belts as they enter the New Year.
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