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Why small business shouldn’t get too excited about Budget 2018

For a Budget that has been heralded as the most small-business friendly for some time, the praise from the SME sector has been far from exuberant. Brexit is the obvious elephant in the room, but as the dust settles, could more have been done to support small businesses?

There were plenty of positives for small business owners in Budget 2018, from the increase in the annual investment allowance and the reduction in the apprenticeship levy contribution to the decision to continue the employment allowance and the extension of the qualifying period for entrepreneur’s relief. In addition, two startup schemes, the New Enterprise Allowance and Start-up Loans, have been extended.

But the headline news, as far as small businesses are concerned, is the decision to cut business rates by a third from April 2019. Unsurprisingly, given the chaos, complaint and cost surrounding business rates reform, the move, which the government say will save £900 million, has been given a warm welcome.

However, the cut seems a very short-term fix – the application of a sticking plaster when more intensive surgery is required. The small business sector has long argued that the structure that defines the system of business rates is terribly out of date and in desperate need of revamping. Furthermore, two years is a short time in business and what will happen to the system in April 2021?

Indeed, this short-term argument is one that can be applied on a broader level to Budget 2018. The measures are undoubtedly a positive step as far as small business are concerned but given the current market conditions, more concrete, long-lasting reforms would have been much more beneficial to an under-pressure sector.

But how can the Chancellor look beyond the short term? The measures outlined for small businesses in Budget 2018 are to a large extent contingent on a deal being agreed for the exit of the UK from the European Union. The picture could change radically in the event of a no-deal Brexit and that remains a real possibility. If a deal isn’t agreed, we could see a Spring Budget in which the Chancellor has to prepare the country and its businesses for a much bleaker future.

So, for all the positives, uncertainty still reigns. This is why alternative finance remains so important for small business owners. In the face of continued caution from traditional lenders and prolonged market softness, invoice finance, asset finance, peer-to-peer lending and crowdfunding are providing small businesses with an alternative means of accessing capital to maintain cashflow and for investment in growth.

This is how a Sussex small business used peer-to-peer lending, through a commercial finance broker that specialises in alternative finance, to raise the capital to buy new equipment.

It is encouraging to see the Chancellor recognising and responding to some of issues facing small business, but owners shouldn’t get too excited about the measures laid out in Budget 2018. More long-term thinking is required and much could change for SMEs in the next six months. That’s why awareness of all finance options, including alternative finance, is vital.

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

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