The UK’s 4.8 million SMEs are vital to the economy, as they are at the heart of economic growth, providing 60 per cent of private sector jobs and half of private sector turnover. But despite 67 per cent of small and medium enterprises (SMEs) being ambitious to grow within two to three years, just 20 per cent expand their workforce each year.
To help translate aspiration into action, the government has announced at a small business summit three major policies to:
- Improve access to finance.
- Make it easier to do business with the public sector.
- Allow social tenants to start up their own business from home.
Minister for Business and Enterprise Mark Prisk said;
“As a former small business owner I know how important our SMEs are to the growth of this country. I entered government with the goal of making this the most entrepreneurial decade in our history and I’m confident today’s announcements will make that a reality.”
Mark Prisk would like to hear from businesses and entrepreneurs on LinkedIn - what are the barriers holding back your business that Government could remove? Join the group and the discussion here.
Read Backing small business (PDF, 48 Kb)
The Department for Business and the Better Regulation Executive have published a report, Lightening the Load (PDF, 1.0 Mb) , which focuses on how the smallest businesses experience and deal with the overall regulatory burden.
Improving access to finance
For businesses to grow they need access to reliable sources of finance beyond just looking to their bank for a loan. In July the green paper, Financing a Private Sector Recovery, was launched and received over 180 submissions.
Today the Business Secretary Vince Cable responds to the consultation and announces several major policies:
- The successful Enterprise Finance Guarantee (EFG) will continue for the next four years, making around £2 billion available to viable small companies without a credit history or collateral.
- The government will commit a further £200m to Enterprise Capital Funds, supporting equity investments in the highest growth potential businesses over four years.
- The government welcomes the joint bid of business angels and the Government’s SME investment arm, Capital for Enterprise, for a co-investment fund as part of the Regional Growth Fund to support angel investments into high growth potential early stage SMEs, particularly in areas worst affected by public spending cuts.
- The government will also work with banks on several areas launched in their response to the green paper, the Business Finance Taskforce. This includes the £1.5 billion Business Growth Fund, mentoring and a new lending code.
Making it easier to do business with the public sector
The Government has a strong role to play in boosting enterprise and helping businesses. Critical to that is giving them access to Government contracts, instead of leaving that as the preserve of big business. To ensure this happens:
- A goal has been set to have a quarter of Government procurement directed to SMEs.
- Government agencies will aim to remove qualifying barriers that prevent small businesses accessing Government contracts.
- Government also reaffirms the commitment that 80% of prime contractors are paid within 5 working days. All Government contractors will be required to pay their suppliers within 30 days if they wish to benefit from departments’ procurement.
Allowing social tenants to start up their own business from home
The Government believes that enterprise is for everyone, including people from disadvantaged backgrounds. All members of society are free to start their own business. So Government will:
- Work with social landlords to tackle the misconception that social tenants cannot start up a business, and encourage tenants to pursue their enterprising ideas.
- The Enterprise Finance Guarantee will be made more accessible to small community finance institutions, to benefit businesses starting up in disadvantaged communities.
Some of the measures that Government is announcing will apply to England only but Government will look to work closely with the Devolved Administrations to ensure that SMEs are supported across the UK.