Ultimate Finance: The Budget for Growth- the government’s plans to support SMEs
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Austin Thorp, Managing Director (North) of ultimate finance, examines the likely impact of the Budget on SMEs All eyes in the SME sector were on George Osborne this week when, as part of the Budget, he unveiled proposals to support what he referred to as ‘the innocent victims of the credit crunch’. Certainly ultimate finance has seen many of the SMEs in the North struggle becoming victims of the broader economy, and has put in place funding solutions that either enable growth, or that support a company through a particularly challenging time. This was hailed as ‘the Budget for growth’, and the focus on easing the burden for SMEs, both financial, regulatory and administrative, certainly supported this. The Chancellor declared that a number of measures in the Budget were designed to ‘make the UK the best place in Europe to start, finance, and grow a business’, and changes such as the Small Business Rate relief and the reduction in corporation tax were positive steps. The threshold for start-ups before they have to register for VAT has increased by £3,000 to £73,000, and all of these are more than just gestures; they will provide tangible benefits to SMEs. Specifically for the North West, £900 million has been committed to fund the complete electrification of the line between Liverpool, Manchester, Preston and Blackpool, which will be a significant boost for the area, and an additional £85 million will be used to fund the Manchester / Piccadilly railway link. These developments will all help to generate additional activity in the region, which can only be positive for SMEs. Regulation is expected to become lighter, particularly for businesses with fewer than 10 employees, which will undoubtedly be welcome although the details are not yet clear. Administration is also expected to become slightly more streamlined as income tax and National Insurance payments are merged. Regardless of these changes, there are still a number of fundamental issues that SMEs face, and the immediacy of a need for cash is one that we constantly see amongst our client base. Lighter regulation of SMEs is welcomed; however, the ongoing tightening regulation of banks means that it remains difficult to find traditional sources of funding. Banks restricting the financing available to SMEs means that alternatives such as asset, invoice and trade finance are increasingly attractive, as they can be much more flexible. Localised services also mean that companies can work with providers who are responsive, but with the security of a larger network behind it. ultimate’s Manchester office supports Northern companies in the region, and our on-the-ground team provides immediate support. Manchester has been announced as one of the new nominated enterprise zones, identifying it as an area that will deliver economic growth. This will provide a range of benefits, from rate discounts to faster broadband, and a supportive regulatory environment is also promised. Given Manchester’s profile as a key financial centre, this sort of recognition and support for SMEs in the region is a very positive step. SMEs are frequently referred to as the sector of the UK economy that will drive growth over the coming years, and ensuring that they are well financed and in a strong position in terms of cash flow is essential to them being able to create jobs and work towards the recovery of the economy as a whole. This sort of support is still not available from traditional means, and is unlikely to be in the same form again. Alternatives such as asset backed finance are therefore an essential tool in this process. The Budget certainly suggested that government policy is looking favourably on SMEs, and whilst it cannot be expected to solve every problem, it does at least attempt to provide a supportive framework in which SMEs can operate and, ultimately, thrive. Austin heads the team at ultimate finance’s offices in Manchester. With 24 years’ experience in the finance sector, Austin is also a Manchester City season ticket holder, plays off a handicap of 14 at Worsley Golf Club and enjoys watching rugby. More articles in
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