A Budget for business not banks?

Hey everyone

If you read the recent Budget-related post by Mark Dye, our newest Business Heroes contributor, you’ll know that he was pretty downbeat about what small business might get from the Exchequer.

Well, they say that 20/20 vision is hindsight so, with the benefit of having been able to absorb the full details of Mr Darling’s speech yesterday, here’s my take.

With election fever gathering, it’s difficult to look past the politics when it comes to this year’s Budget but – nonetheless – I’ve tried to keep to a summary of what the Budget revealed for small business rather than the machinations of why it’s been done!

Budget 2010 - Did the Budget meet your expectations?

Going public

Pre-Budget, there was big expectation that the public sector would be in the firing line for big cuts to help reduce the deficit. Much like elsewhere in the Budget though, the Chancellor made it very clear that he thought it would be dangerous to change course in the early stages of recovery, and instead opted to leave the sector intact. Darling also promised that small business would have a better chance to pitch to the public sector, by awarding 15% more Central Government contracts (equating to £3bn worth of business). He also promised to take steps to speed up payment to small business from government, with 80% of invoices to be paid within five days

Funding entrepreneurial flair

The Chancellor was keen to point out the Government’s successes on making banks lend more to small business, citing the £38bn lent to SMEs by RBS and Lloyds thanks to Labour’s intervention. Darling’s assertion that he would introduce £94bn in new business loans, with more than 50% going to SMEs, was backed up by two new initiatives in the form of the UK Finance for Growth fund (providing a £4bn range of finance support) and the Growth Capital Fund (loans for fast growing business, with 50% provided by commercial banks)

Credit where credit’s due

Finance was, unsurprisingly, the big theme for small business. The suggestion that there are still too many SMEs being unfairly denied credit will probably resonate loudly with the community as a whole. Darling’s announcement that a new body to adjudicate and provide legal enforcement to the SME credit application process will be an interesting one to watch develop

Tax doesn’t have to be taxing

Business rates are the 3rd biggest business cost according to the FSB, and the Chancellor’s decision to cut business rates for one year from October will undoubtedly affect hundreds of thousands of businesses for the better (around 500,000 in Darling’s estimate). The dual boost of doubling Capital Gains relief from £1m to £2m and the decision not to raise the rate is also likely to be welcomed

In cider information

Well, we couldn’t help but mention it – 10% duty on cider! My commiserations to West Country entrepreneurs!

So, what’s your view on some of the above proposals? Let us know by posting a comment below.

All the best,

Gordon

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One Response

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