The wealth and prosperity of the nation is built on the back of successful small businesses.
Unfortunately, running a small business has never been more difficult: times are tough and fledging companies are failing at an alarming rate.
So in a time of recession small firms need all the help they can get from government and the banks. However, the latest reports would seem to suggest that this is the one thing they are not getting. It would appear that a lack of trust in the country’s banks and a shortage of funds are stopping smaller businesses from growing.
According to Dr Adam Marshall, Director of Policy and External Affairs at the British Chambers of Commerce (BCC), believes that news of the availability of credit increasing is welcome news for small firms, however, he argues that the smallest firms are still being put off asking for credit by the institutions they view as inapproachable. He is encouraging banks to do more and make a concerted effort to help small companies grow, and encouraging small businesses to take expert advice form accountants with knowledge of all the potential sources of funding available. Dr Marshall said:
“It is unfortunate that while demand for credit from medium-sized companies increased in Q4, there was a sharp reduction in credit demand from small companies. In our view, this reflects discouraged demand among small businesses, with recent BCC research revealing that half of firms mistrust banks and building societies.”
In the light of recent announcements, it would seem that the government, at least, is listening.
Last month the government announced that the new Enterprise Finance Guarantee scheme will hopefully help to encourage banks to start lending money in the coming months. Moreover, the government has also announced that it will be extending its start-up loan scheme to help entrepreneurs take their ideas to the production stage, and also provide cash incentives to small businesses to encourage them to take on young apprentices.
The Apprenticeship Grant for Employers (AGE) was introduced in February last year, but it was announced in the Autumn Statement that the scheme would be extended for a further 12 months to help reduce youth unemployment and deliver growth within smaller firms. A £1,500 grant is available for up to ten apprentices aged between 16 and 24-years-old. What will probably please small business owners more is that this grant will now be paid in one lump sum, rather than two separate instalments.
Business Secretary, Vince Cable, explained why the scheme had been extended, and how it will work:
“Employers may be concerned about the time recruitment and training will take, and anxious about how it will work” he said. “So the £1,500 grant is a token to acknowledge this and thank employers. I hope many more people will take us up on our cash incentive to grow their business, and train up the workforce of the future.”