HHBA has received the following letter, from the Minister for Small Business, Consumers and Corporate Responsibility, Kelly Tolhurst, this was sent to me by Nicholas Soames MP.
Britain’s 5.7 million small and medium enterprises (SMEs) are the backbone of the economy, accounting for 60% of employment in the private sector. Making sure these businesses can access the finance they need to fulfil thelr growth potential is a key part of our modern lndustrial Strategy. These are some recent initiatives of which you and your constituents may wish to be aware.
Supportinq newly-created enterprises
From March 2012 to July 2018, our successful Start-Up Loans initiative delivered more than 57,000 loans across all parts of the UK, lending a total of f436 million and contributing to the creation of more than 56,600 jobs.
Over the same period, the programme has made 47 loans to businesses with a total value of £412,536 in your constituency of Mid Sussex. This scheme has been successful in reaching groups who may find it harder to access finance from commercial lenders. For example, 39% of entrepreneurs benefiting from a start-up loan are women and 21% are from an ethnic minority background, as compared to 19% and 4% in the SME population as a whole.
We have committed to increasing this support so that 75,000 start-up businesses will have been supported by the end of this Parliament.
The British Business Bank We are delivering a range of other programmes through the Government-owned British Business Bank to improve access to finance for smaller businesses. The bank is currently supporting around £5.2 billion of finance to almost 75,000 UK businesses.
Its aims include:
- Helping to create a more diverse market for finance that offers a wider range of options for SMEs;
- ldentifying and helping to reduce regional imbalances in access to finance for smaller businesses across the UK;
- and Enabling SMEs to access the type of finance best-suited to their needs.
The British Business Bank has recently launched an online Finance Hub to help entrepreneurs identify and access the right type of finance. The hub also includes checklists to help businesses get ‘investor ready’, articles from finance providers and case studies from a broad range of sectors. An Intemet search for ‘Finance Hub’ is the simplest way to access this resource. The full address is: www.british-business-bank.co.uk/finance-hub/
Addressing practices that adversely impact SMEs
Where we see practices that unfairly constrain SMEs’ finance choices, we are prepared to act. A recent example is invoice finance, which is an arrangement whereby businesses assign their right to a payment from a customer to a finance provider in return for an advance of funds. At present, some SMEs are prevented from using invoice finance because of contract terms imposed by their customers that prohibit assignment.
From 31 December 2018 when the Assignment of Receivables Regulations come into force, any such contractual restrictions entered into after 31 December 2018, with certain exceptions, would have no effect and could be disregarded by small businesses and finance providers. This new measure is expected to provide a long-term boost to the UK economy worth almost £1bn.
Finally, the overall level of late payment debt owed to SMEs has fallen substantially. lt stood at £14.2bn last year, down from £30.3bn five years ago according to BACS, the payment service provider. This is welcome progress and I am determined to see the level of late payment debt reduce still further.
As announced last week: .
- We will be introducing a new, tough and transparent compliance regime which underpins the Prompt Payment Code, including by appointing the Small Business Commissioner to the Code’s Compliance board
- We will consider the best way to ensure all companies have responsible payment practices in their supply chains, including whether all company boards should give one of their non-executive directors responsibilities for prompt payment.
These proposals are explored further within a call for evidence on tackling late payment, also launched last week, which invites proposals on what more could be done to establish a responsible payment culture.
Britain’s small and medium enterprises deserve both recognition and practical support. The initiatives I have outlined above support the goal of making the UK the best place in the world to start and grow a business. Please help spread the word by highlighting these opportunities to both existing businesses and new entreprerleurp in your constituency
KELLY TOLHURST MP Minister for Small Business, Consumers & Corporate Responsibility