Good news for small business finance and Small Firms Loan Scheme
Wednesday 31 July 122796
Forward-thinking entrepreneurs will already be aware that an economic downturn can actually present the most fruitful new business opportunities. But the Pre-Budget Report delivered to the House of Commons by the Chancellor Alistair Darling on
While the Chancellor’s ‘headline measure’ of a temporary cut in the standard rate of VAT from 17.5% to 15% (from 1 December 2008 to 31 December 2009) was largely dismissed as cosmetic by existing small businesses, Mr Darling announced some much more useful measures that could pave the way to success for your business. So what do you need to know?
The Small Business Finance Scheme
Most crucially, the Chancellor has confirmed a new injection of government funding which will be available to small and medium-sized enterprises that, he admitted, are currently facing ‘growing credit constraints’.
The new – but temporary – Small Business Finance Scheme promises a fresh £1billion government guarantee facility to support bank lending to small businesses. This is in addition to the already popular Small Firms Loan Guarantee scheme (SFLG) whereby the government guarantees 75% of bank business loans of up to £250,000 in return for a 2% annual premium.
But credit obtained via the new Small Business Finance Scheme will be available to small business in tranches of between £1,000 and £1m and, according to Mr Darling, “lending terms will be much more flexible.” Finer details of the scheme have yet to be announced.
Also under the Small Business Finance Scheme umbrella, Mr Darling announced a further £1billion guarantee facility to support bank lending to small exporters; a £50million fund to convert business debt into equity; and a £25million regional loan transition fund.
How else has the Pre-Budget Report helped small businesses?
- The Chancellor also announced a new HMRC Business Payment Support Service that will work with small businesses in ‘temporary difficulty’ to agree an affordable timetable for all tax, NIC and VAT liabilities. Interest will still be payable on amounts paid late however.
- The small companies’ rate of corporation tax that was due to have been increased from 21% to 22% from
1 April 2009, will not now be changed until 1 April 2010. This should provide a welcome respite for small companies struggling with cash flow. - Small companies will now also be permitted a temporary additional carry-back up of to £50,000 of losses which can be set against taxable profits from the last three years.
- The Chancellor also welcomed the Royal Bank of
Scotland and NatWest’s recent announcement to guarantee committed overdraft rates and contracts for its small business customers for at least 12 months. He added that other banks should follow its example.
Full details of what the Pre-Budget report means for small businesses
http://www.hm-treasury.gov.uk/d/pbr08_chapter4_136.pdf
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