New laws aim to help small businesses to secure funding

Small businesses struggling to access invoice finance could be helped by the introduction of proposed new laws. The plans form part of the government’s ‘modern Industrial Strategy’.

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Invoice financing is an advance against a future payment, under which businesses can approach a finance provider and assign them their right to be paid in exchange for around an initial 80% of the value of the invoices. This initial advance is received within a few days while the balancing 20% (less fees and charges) is paid when the customer settles the invoice.

Currently, small suppliers which are in a contract with a larger company may not be able to secure invoice finance, due to the terms of the contract. Small suppliers often find themselves in a situation where they do not have sufficient power to renegotiate their terms and conditions.

Under the plans, after 31 December 2018 such restrictions will have no effect (with certain exceptions), and small businesses will be able to go to their lending partner to secure the finance they need.

Commenting on the news, Small Business Minister Kelly Tolhurst said: ‘These new laws will give small businesses more access to the finance they need to succeed and will help ensure they have a level playing field from which to set fair contracts with the businesses they supply.’

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Mid-sized companies key to job creation, says CBI

02 Mar 2015

The Confederation of British Industry (CBI) has urged the next government to help medium-sized businesses to gain access to funding.

Finding large investors through a private placement market, without having to list on a stock exchange, is the CBI’s recommendation to allow SMEs to grow.

CBI Director-General, John Cridland, said: ‘The UK is still missing a trick on long-term growth capital. The next government needs to mind the financial gap otherwise our medium-sized firms – the job creating dynamos of the economy – will suffer.

‘If firms can’t get the trade finance they need to explore new markets, the UK has no way of meeting its ambitious exports target of £1 trillion by 2020.’

He conceded that robust regulations are necessary to prevent money laundering, but can be ‘cumbersome’ for businesses looking to grow.

The CBI pre-election policy wishlist also includes more investment in roads, railway and energy infrastructure projects, in accordance with the Government’s National Infrastructure Plan to invest £375 billion.

Labour leader promises NHS with no tax increase

22 Sep 2014

Ed Miliband has made a pledge to protect the NHS from its funding crisis without raising taxes ‘for everyday working people’.

He spoke on the BBC’s Andrew Marr show. While reinforcing his promise to bring back the 50p top tier income tax rate, and a levy on homes with a value over £2 million, he said there would be no increase in national insurance.

‘I am deeply worried about the NHS in the next parliament,’ he said. ‘We are certainly going to make sure the NHS does not lose money and we want to do more than that. We will be saying more about that between now and the election’.

If elected to power next year, Labour also promise to strengthen GP services and repeal the Health and Social Care Act. Mr Miliband said: ‘We are going to put the right values back in the NHS’.

Funding for Lending figures climb to new high

03 Dec 2013

A government scheme aimed at boosting finance to businesses achieved its highest quarterly lending results in the third quarter of this year, new data reveals.

The Bank of England said banks and building societies had borrowed £5.8 billion under the Funding for Lending scheme (FLS) during the three months to the end of September. This was more than three times the amount recorded in the previous quarter.

Launched in July 2012, the FLS is designed to boost lending to homebuyers and small businesses by providing banks with cheap, state-backed funding.

Last week the Bank of England and the Treasury announced that the scheme will be changed to exclude individuals following an increase in mortgage lending and the upturn in the housing market.

The scheme will, however, continue to provide support to small and medium-sized enterprises (SMEs) during 2014.

Commenting on the latest FLS statistics, Paul Fisher, executive director for markets at the Bank of England, said: ‘An economic recovery has taken hold. These data show that a significant improvement in credit conditions, aided by the FLS, is now feeding through to lending.

‘But credit supply to businesses remains relatively subdued, especially to SMEs. The refocus of the FLS is designed to continue to support the recovery, where it is needed.’

The Confederation of British Industry (CBI) welcomed the data but called for more action to boost lending to SMEs.

‘Despite overall FLS lending substantially increasing, Bank of England data shows that net lending to SMEs continues to fall, so the recent move recalibrating the scheme towards business lending is welcome,’ said Matthew Fell, the CBI’s director for competitive markets.