Osborne’s best-kept secret: help for SMEs
Eye-catching initiatives to help small and medium sized businesses; budgets bristling with enterprise measures; help ‘packages’ announced at party conferences: but many SMEs just don’t see any difference on the ground…
A study out this week suggests that the government is failing to communicate its enterprise-boosting measures after the initial razzamatazz of the PR launch and the photo opportunity.
A study of more than 500 UK SMEs and micro SME suggests that many are unaware of the initiatives in place ostensibly designed to help them.
- The research, carried out after the March 2013 budget, revealed that a quarter of small business owners were unaware of the reduction in the rate of corporation tax and of those that said they were, only 13 per cent could state the correct rate.
- Nearly half of all business owners were unaware of the ongoing government initiative to reduce red tape for small businesses and only five per cent knew for sure they were in an enterprise zone with around a third having never even heard of enterprise zones.
- One in four was unaware of the scheme to roll out superfast broadband connections across the UK and 17 per cent had no knowledge of apprenticeship schemes.
And for those that are aware of these initiatives, they are far from sure that they are working for them.
Just seven per cent believe that there has in reality been a reduction in red tape with an even smaller four per cent saying it has saved them any money. Just two per cent 2% believe they have seen any benefit as a result of being in an Enterprise Zone.
When it came to finances, while being able to secure lending and/or funding ranked as the number two concern (after fuel costs) for small business owners, many were unaware of the funding options that may be available to them.
The study, by AXA Business Insurance, revealed that half (49 per cent ) had not heard of the funding for lending scheme, 53 per cent were unaware of plans for a Business Bank while 71 per cent had not heard of crowdsource or crowd funding.
Of those that were aware of the funding for lending scheme, just five per cent believed that it was working for small businesses. And only nine per cent were very confident that the new Business Bank would lend to small business owners.
Darrell Sansom, Managing Director of AXA Business Insurance said, “The numbers of small businesses in the UK continue to climb rapidly but it seems that many could be missing opportunities to help their business along the way through a lack of awareness of the support that may be available to them.
“We are also concerned that among those that are more aware, many are not seeing the benefit that they would want”.
‘Low awareness’ of P2P lending for SMEs
Meanwhile, a separate survey reveals that low awareness may be holding up the spread of peer-to-peer lending.
One in four small to medium sized firms fear they will struggle for finance over the next 12 months, and 16 per cent say they would consider applying for a peer-to-peer lending scheme (“P2P”) loan over the next year.
Peer-to-peer lending - also known as person-to-person lending, peer-to-peer investing and social lending - is the practice of lending money to businesses or individuals online. The sector is set to boom with as much as £12 billion to be lent through SME P2P schemes annually, roughly a tenth of total mainstream SME bank lending in 2012.
As many as 26 per cent of people in the UK would consider loaning money to UK SMEs by joining a P2P scheme next year when the sector will be fully regulated by the Financial Conduct Authority. And 17 per cent say they would consider lending over the next 12 months.
This is according to a new study by rebuildingsociety, a peer-to-business lending website that connects SME borrowers with lenders looking for better returns than those offered by savings accounts.
The study suggests the biggest obstacle to the growth of P2P lending is low awareness with six in ten (59 per cent) consumers not understanding what the term meant. More than half (54 per cent highlighted a lack of knowledge as the principal reason as to why they wouldn’t invest in a P2P scheme, followed by the fear of borrowers not repaying the loan (46%).
To date rebuildingsociety has advanced £340,000 of cash generated through private individuals to UK businesses and plans to reach £1m by the end of July 2013.
For more information on how rebuildingsociety connects individuals and SMEs looking to access finance, visit https://www.rebuildingsociety.com
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SCOTS SMEs 'MORE CONFIDENT THAN UK'
Scottish small business confidence is now higher than the UK average, the latest Federation of Small Businesses’ (FSB) quarterly report shows.
The FSB’s Voice of Small Business Index, published yesterday shows that while small business confidence is growing across the UK, an average firm in Scotland is currently more bullish than its counterpart in England and Wales.
The analysis also shows that, as spare capacity in small business falls, recruitment intentions are at their highest level since the research began in the first quarter of 2010.
The Scottish Small Business Index, the FSB’s measure of small business confidence, rose substantially to plus 44 points in the second quarter of 2014, up 8 points from quarter one. This represents a substantial improvement from this time last year, when the index stood at just plus 9 points. Half of the small businesses surveyed expect business prospects to improve over the next three months, compared to just 12 per cent who expect them to deteriorate. Across the whole of the UK, the Small Business Index rose from plus 35.7 points to plus 39.7 points over the first quarter 2014, while the share of UK businesses expecting conditions to improve held steady at 47 per cent.
The proportion of Scottish firms reporting that they are running below capacity fell from 52 per cent at the start of the year to 46 per cent this quarter. Looking ahead, only 33 per cent of firms expect to be running below capacity during the next three months. Revenue and profits are looking healthier, too, with 37 per cent of respondents expecting revenues to increase over the next quarter. A balance of 16 per cent reported increased profits during the last quarter and 26 per cent of firms anticipate higher profits in the coming year. Further, 19 per cent of businesses plan to increase capital investment over the next year, compared to 8 per cent at this point in 2013.
Says Andy Willox, the FSB’s Scottish policy convenor, “While it is nice to see Scottish small business confidence climb above the UK average, more significant is the continued rise in small business confidence across the UK. Further, reduced levels of spare capacity means that more businesses are looking to recruit.
“This is good news for unemployed Scots and for the recovery – as is the fact that one in five businesses plan to increase capital investment this year. More businesses placing orders with suppliers means more full order books, more materials to be sourced and more staff to be hired. That is the key to rebuilding our economy.
“No matter how confident we are, though, none of this investment will happen without finance. Although the position has improved since this time last year, it has hardly moved in the last three months. We’ll need to keep a close eye on this trend and ensure things don’t start to slip back. Having worked so hard to build a recovery, we can’t have it stifled by a lending market which lacks our members’ ambition.”
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RETAIL LEVY 'PUSHING BUSINESS OUT OF SCOTLAND'
Scotland’s £95 million large retail levy “looks designed to push retail investment elsewhere”, the Scottish Retail Consortium claims in a pre-budget submission to Holyrood.
It argues that the non-domestic rates system “is no longer fit for purpose. It is a disincentive to invest in commercial premises, the tax seems to only ever rise, and retailers pay disproportionally more than other sectors.”
A comprehensive longer term overhaul of the business rates system is required, which would increase retailers’ confidence about investing in property, create more jobs and help revive high streets.
The large retail levy or ‘Tesco tax’ was brought in to assuage small firm concerns that the retail super-stores were sapping business from the high street and putting traditional and family businesses in jeopardy. Others saw it as a pure and simple tax grab by the Holyrood administration.
And there other improvements, the SRC argues, that can be made to support the retail industry. “The small firms’ relief is a welcome acknowledgement of the need to keep down costs, and avoiding the repatriation of control over the poundage rate to local authorities is sensible.”
However, it argues, the £95 million large retail levy was a significant departure from poundage rate parity.
“It has meant that for three years 240 retail outlets are paying 28% more than equivalent stores in Wales or England. The levy has been a conspicuous blot on the Scottish Government’s claims to have the most competitive rates regime in the UK.
“Indeed, the policy appears designed to push retail investment elsewhere in the UK, rather than attract it to Scotland, the very antithesis of the argument that the First Minister has been making recently in seeking to “rebalance the economic centre of gravity across these islands”. We welcome the pledge not to continue with the levy.
The SRC recommends that Scotland’s rate poundage rises no faster than that in England, it comes good on its promise not to renew the £95 million levy and rejuvenate the Business Rates Incentivisation Scheme to ensure that revenues accruing to local government from it are transparently re-invested in aiding town centre regeneration.
Transport is vital to the success of the retail industry. With 23,000 outlets in Scotland, located in every town and village, retailers rely on access to good quality and reliable transport for the daily operation of their businesses – for ease of access for customers, to deliver goods, and to enable employees to reach the workplace.
“We fully support the Scottish Government’s plans to dual the A9 between Perth and Inverness, and the A96 between Inverness and Aberdeen, but would urge a more ambitious timescale for delivery rather than the two decades currently envisaged. Improved connectivity to the North and North East will help unlock the economic potential of these two regions, help get goods swiftly to retail outlets as well as, as is increasingly the case, direct to customers.
