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How SMEs can manage new immigration system costs

The government’s new immigration rules have put small business owners on high alert. Many are concerned about managing staffing costs under the new points-based system. Alternative finance can help.

According to a new report by the Federation of Small Businesses, almost half of the companies that they surveyed said that they “would be unable to meet the immigration fees currently levied on employers when they hire non-EU staff should they be extended to all workers from around the world.”

Furthermore, the study also revealed that almost 40% of small employers are already finding it hard to recruit the right talent and that a significant reason for this struggle is that UK citizens are unwilling to work in their sector.

One of the key requirements of the new points-based immigration system, which is scheduled for implementation in 2021, is that applicants from the European Union will need to have a job offer that carries a minimum salary of £26,000. They will also need to speak English and have never had a custodial sentence of 12 months or longer.

Given the number of mid- and low-skill jobs that have a salary below this level, and the number of UK companies that are reliant on mid- and low-skill workers, it is unsurprising that there have been calls to lower the threshold and to exempt small firms.

That said, while concerns have been raised, the new system hasn’t been rejected by the small business sector, with the Federation giving it a qualified welcome. Nevertheless, one of its major lobbying points is, that for the system to work, the government must keep costs down and attach exemptions for specific jobs and companies.

It remains to be seen whether the government will act on the Federation’s recommendations. Whatever happens, the new system will be introduced next year and small businesses will have to be ready for the change and any disruption this brings to recruitment practices. Managing the costs will be part of the process.

So, how can small businesses manage this upheaval and safeguard cash flow at a time when they are already under significant pressure, not least as a result of weak economic growth and a raft of policy and non-policy-related costs?

Alternative finance can help.

In the wake of prolonged caution from traditional lenders, a position that the protracted Brexit process is helping to entrench, alternative finance facilities such as invoice finance, asset finance, peer-to-peer lending and crowdfunding are proving a vital source of capital for small businesses, both for safeguarding cashflow and for essential investment. These facilities, which offer a more personalised approach to lending, are helping small businesses grow.

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

The new immigration rules present a new challenge for small business owners. But one that is manageable should the government caps costs and firms put the right financial plans in place. With regard to the latter, it is important that owners are aware of all the funding options available to them, including alterative finance.

To find out more about A&T Business Associates services, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.

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