Business support schemes to get ‘new lease’ in pre-Budget Report
It is expected that the Chancellor, Alistair Darling will use the pre-Budget Report to extend schemes designed to support businesses through the economic downturn.
The schemes include the ‘time to pay’ initiative that helps firms cope with their tax bills and the Enterprise Finance Guarantee.
Also on the support package agenda will be plans to create funding channels for fast-growth smaller firms.
Although Mr Darling is expected to predict a return to growth at the end of the year, there are major concerns in government circles that, without further support, the economy may be forced into a double-dip recession.
With credit still under pressure for many firms, it is thought that the Chancellor will continue with the stimulus package of government funding announced last year.
The Enterprise Finance Guarantee, which offers state support for small business loans, is set to close next March, but may be extended for a further six months at least.
The time to pay scheme, which enables firms to negotiate with HM Revenue and Customs (HMRC) a longer timetable for settling their tax bills, also looks set to continue into next year.
In addition, Mr Darling is likely to back the findings of a review carried out by Christopher Rowlands into the funding available to small, fast-growing businesses.
With many businesses suffering from an equity gap – their funding needs too small for venture capital firms and too large for banks – the review urged the government to set up new financial products that will encourage investors to lend to small firms.
The recommendations, if adopted, will combine with a new government-backed National Investment Corporation to provide SMEs with additional sources of funding in the absence of adequate bank lending.