Small business have faced a turbulent time in recent years, so it’s understandable that the UK government has taken steps to ease the burden.
The latest initiative to come from HM Treasury (HMT) and the Department for Business, Innovation and Skills (BIS) is the ‘business bank’, which aims to open up access to capital for small and medium-sized enterprises (SMEs).
Business secretary Vince Cable announced the launch of the venture last week, as £300 million was invested in the scheme, The Guardian reported.
This is the first tranche of £1 billion of funding to be provided to companies that are finding it difficult to obtain capital from elsewhere.
Cable said: “Small and medium-sized businesses are still telling me that access to finance is their number one problem, preventing them from investing and growing.
“That’s why through the business bank we are developing a range of measures to provide businesses with the power to choose the type of finance that suits them.
“Today’s £300m boost shows we are serious about increasing competition and diversity in the business lending market.
"Establishing a lasting business bank institution is a long-term project, but getting this money reaching SMEs as soon as possible is the first step."
t is expected that the first loans from the business bank will be issued later in the year, though companies have been urged to submit expressions of interest by May 22nd.
While the business bank will not be fully operational until next year, ministers have been keen to engage with industry and start to provide funding as soon as possible.
The move has been welcomed by a number of industry figures, but British Chamber of Commerce director of policy Dr Adam Marshall urged Cable to move faster to expand the bank.
He said: “Vince Cable is right to say that the creation of a fully fledged business bank is a long-term project.
“However, for the business bank to be a game-changer, it urgently requires both vision and scale. To that end, we continue to urge ministers and the Bank of England to ‘think bigger’ when it comes to the bank’s investment capital.”
Federation of Small Businesses (FSB) policy chairman Mike Cherry commented: “It is good news that the business bank wants to get finance out quickly to the businesses that need it. The FSB has long called for more competition in the sector to promote choice and innovation so we welcome the diversity that this institution will create.”
There have been a number of announcements and changes made in recent months to support small business tax advice customers in growing their business.
In this year’s Budget, Chancellor George Osborne announced the employment allowance, which will give businesses £2,000 towards their national insurance contribution (NIC) bill. As a result, many SMEs are expected to be entirely exempt from NICs.
From April 6th, small businesses can submit tax returns on a cash basis accounting system. This means they will not have to pay tax on money they are owed at the close of the financial year from 2013/14 onwards.
In addition, Real Time Information payroll requirements came into force on the same day, which are expected to cut business administration costs by £300 million annually.