Small businesses have faced a seemingly never-ending set of challenges: Brexit, COVID-19 and the energy crisis have all taken their toll, slowly eating away at cash reserves. 

While the Energy Bill Relief Scheme was generally welcomed by business as an important initiative to help through the winter, uncertainty remains over what happens after six months and which sectors may or may not continue to receive some level of support thereafter.

The Chancellor’s mini Budget set out an ambitious growth target of 2.5% for the UK economy. Encouraging entrepreneurship and the success of small businesses is key to meeting this target.

Taken as an overall plan, it has created more uncertainty, not less. The Bank of England has announced it will buy as many long-dated government bonds as needed to stabilise financial markets after British gilt prices slumped following the Chancellor’s statement. The International Monetary Fund (IMF) has even stepped in to urge the UK government to rethink its strategy. Increased uncertainty is likely to lead to a reduction in funding options and those that remain are likely to be more expensive. We are seeing this now in the mortgage market.

On a micro level, however, there are measures that small businesses can use to their advantage. Levelling up, for example, remains on the political agenda; encouraging small businesses to start, grow and prosper creates opportunities for all.

The mini Budget confirmed continued support for the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS). Laura Beales, Co-Founder and CFO at Tally Market, welcomed this: “The extension of the SEIS to £250,000 and the continuance of the EIS comes as a welcome relief. Both SEIS and EIS are core to the success of the UK start-up ecosystem; encouraging high risk, early-stage investments that would not otherwise take place.”

The repeal of the IR35 off-payroll working rules is also likely to be welcomed by small businesses. Flexibility in hiring is a critical factor in early-stage growth. Removing the burden of determining employment status away from employers will help businesses to engage the right skills and free up time to focus on other priorities.

Swoop provides funding for ambitious UK businesses, and is a trusted partner of ICAEW Member Rewards. It is aware of the challenges facing SMEs at the moment. “Our number one priority for our customers is cash flow,” says Sam Tasker-Grindley, Head of Advisor Channel for Swoop. “To maintain that, you need certainty of what’s happening next – good or bad. The energy cap isn’t ideal, but it’s better than not knowing. The IR35 changes are much more helpful. At a time when interest rates are going up, SEIS changes are a clear indication that businesses should consider equity investment alongside borrowing for growth.

“The tax windfall for the wealthy could be invested in promising businesses. Advisers should be looking at matching SMEs needing funding with investors ready to invest.”

Additional support is available through the extension of the Recovery Loan Scheme and Help to Grow. The latter expanded eligibility for its digital scheme in July, reducing the minimum number of employees a business must have from five to one.

The Start Up Loans programme has provided more than 95,000 loans to start-up businesses across the UK since its inception in June 2012, offering an average of just over £9,000 in support. It’s welcome news that eligibility for the scheme has now been expanded to support businesses trading for up to three years. “With reports that access to traditional bank finance is becoming increasingly difficult, particularly for early-stage businesses, 33,000 new loans available is great news for business,” says Simon Gray, ICAEW’s Head of Business.

This extension is timely, providing further support to businesses grappling with the cost pressures caused by the energy crisis.

ICAEW is committed to supporting small businesses through the Business Advisory Service and Small and Micro Business Community, which recently ran a webinar supported by Marsh Commercial: Top tips on growing a business.