"The ‘small gestures’ that were tabled are not enough to make a difference in the short term, let alone the long term."
- James Robson, CEO of FundOnion
The government has announced that it will increase the VAT registration threshold to £90,000 from 1st April 2024 and will provide £200m of funding to extend the Recovery Loan Scheme to support SMEs to access finance, renaming it the “Growth Guarantee Scheme”.
The Growth Guarantee Scheme will run until the end of March 2026. The scheme offers a 70% government guarantee on loans to SMEs of up to £2 million in Great Britain, and £1 million in Northern Ireland.
The government says increasing the VAT registration threshold from £85,000 to £90,000 will help SMEs to "cut their taxes and help them grow". However, the threshold has been frozen for the past seven years, and many believe the measures announced in today's Budget don't go far enough to support small businesses.
Theo Chatha, CFO of Bibby Financial Services, said: “Today’s budget was a fine balancing act of managing the UK’s fiscal position, while stimulating growth. While the small business community will breathe a sigh of relief at the two-year extension of the Recovery Loan Scheme announced today, more needs to be done to support UK SMEs to grow and thrive amid a tough credit environment.
"We would urge policy makers and the British Business Bank to reinvigorate the underused Bank Referral Scheme to direct SMEs to alternative funding providers. Though economic forecasts are showing signs of improvement, the next six months will be critical to returning the UK to sustainable growth. Access to a wider array of financing options for SMEs must be at the heart of this.”
James Robson, CEO of FundOnion, commented: “Business leaders will certainly feel left out in the cold and undervalued by the Chancellor at a time when Government support and investment in UK small business growth is vital.
“Businesses need a Chancellor that supports long term economic growth, enterprise, and innovation, and is prepared to provide tax relief and incentives alongside greater access to alternative finance for quicker and easier funding.
“The ‘small gestures’ that were tabled are not enough to make a difference in the short term, let alone the long term. This was certainly a wasted opportunity to keep businesses on side, especially at a time when their heads are being turned by Labour in the run up to the election.”
Sinéad McHale, CEO of Satago, added: “Election polls show the majority of UK SMEs are leaning towards a Labour government. The Chancellor’s Spring Budget this year provided a crucial opportunity for the government to reengage with SMEs, and offer practical measures that could alleviate some of the risks they face in doing business.
“Today’s measures to raise the £85,000 VAT threshold, and investment to extend the Recovery Leans Scheme show the government has responded in part to calls made by the sector including the Federation of Small Businesses. The extended 5p cut in fuel duty and proposed extension to advance loan repayments, will also be welcomed by vulnerable households and especially some of the SME founders running businesses on their own.
“However, while these are positive steps, SMEs will be conscious of the government’s motive to win favour ahead of the election through today’s announcement. There are still many problems at bay despite these measures, indicating the Chancellor could have gone further to support better access to capital for SMEs.
“SMEs are the backbone of the UK economy, providing local jobs and revenue across all sectors, but the current economic climate and high inflation are still massively hindering them in reaching their full potential. Late payments, tight cashflow, and poor access to capital are still big issues stopping SMEs from being able to invest in growth – and all too often, creating bad debts. With over £22 billion in unpaid invoices still plaguing the UK, SMEs will need sustained and meaningful policy action from the government going forwards.”
