Smaller businesses need more help to survive yet alone thrive!

By Amanda Vigar, Managing Partner, V&A Bell Brown LLP

I can’t help thinking the Budget was a wasted opportunity. There were some good things in there for smaller businesses, but there were also measures that should, and could, have been included. Add to that it was a Budget of “jam tomorrow”; all in all, it was rather a let-down.

The cut in mainstream Corporation Tax won’t directly help smaller businesses, but it will help to attract overseas businesses to set up in the UK. The Employment Allowance is good news as well as the first £2,000 will be taken off employers’ National Insurance bill. This will mean that many small businesses will no longer have to pay employers’ NI. For a small business owner who is thinking about taking on their first employee a huge barrier will be removed. That’s the good news.

Perhaps the biggest Budget disappointment for small firms was that George Osborne did not announce any curb on business rates and there was no reduction in the rate of corporation tax for smaller businesses. Rates will have risen 13% in three years at a cost to retailers of about £175m a year.

With lending to small businesses down 25% in real terms since its peak in 2009, and almost 10% lower than in 2006, I’m also disappointed that there was no announcement on the Business Bank that has been advocated by the business secretary, Vince Cable. Whilst we don’t want to go down the road of what was tantamount to irresponsible lending in the early years of this century, the tides have turned too far the other way in more recent times. The proposed Business Bank will not lend directly to small businesses, but will give advice on suitable facilities and schemes as well as providing cheap wholesale finance for alternative lenders and so called 'challenger banks’.

More and more businesses feel there is no point in even trying to raise finance to grow, and that’s a real concern in our fragile economy. Baby steps are not what we need right now. We need real action that can give smaller businesses the kick-start and confidence they need to grow and survive. It’s tough out there and there is little real sign that it’s going to get any better fast. So, even though I’m not an advocate of government meddling, I do think that the Coalition should act on lending. There are private finance initiatives springing up, but these need to be co-ordinated, and the Business Bank could certainly help. A client who’s been in business for about twenty years said to me the other day that he wouldn’t have been able to get his small business off the ground had he been starting out today. The barrier is, of course, the lack of finance out there. So, come on Coalition, put some real timescales in place for this new bank, as it’s a good idea, but now’s the time to put your money where your mouth is!