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Why alternative finance can head off a recession

As the result of the EU referendum sinks in, it is clear that alternative finance has a major role to playing in rebuilding small business confidence in the UK.

According to the new Federation of Small Businesses’ Small Businesses Index, small business confidence has hit a four-year low. The survey, which was conducted before the vote on EU membership, saw the steepest decline in confidence since the organisation launched the index. The result of election and the fresh uncertainty that it has caused will have only further unsteadied the ship. We need look no further than news from a Southsea interior design company for evidence of this.

So, how can stability and SME growth be achieved? The Chancellor has gone on record about the possibility of slashing corporation tax. He should also consider tackling concerns expressed by small business owners about labour costs and tax. Further action on reducing red tape would be welcome and reform involving the National Living Wage and the Apprenticeship Levy should be handled delicately.

In addition, the government would do well to address the rising costs of technology. According to the 2016 SME Barometer Research from Exact, more than a third of SMEs could be out of business in five years if they don’t adapt. The link between adapting and affording needs no explanation.

Notably, in his recent comments, as well as talking about cutting corporation tax by 5%, George Osbourne has mentioned a desire to focus on bank lending. This is encouraging but alternative finance has to be part of the government’s plans, whether we see them in the coming months or in the 2016 Autumn Statement.

A key focus of any such plan should be raising awareness of the funding options available, in particular the likes of invoice finance, asset finance, peer-to-peer lending and crowdfunding. The British Business Bank is embracing alternative finance but development needs to be more widespread. Small businesses in the UK desperately need a shot in the arm and this treatment has to include alternative finance.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.

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