Ahead of a “painful” Budget expected this autumn, new research from independent SME funder Bibby Financial Services (BFS) reveals that UK SMEs consider tax incentives and access to finance as two critical areas that need “to be addressed by the Government to unlock growth.”
Data from BFS’s Q3 2024 SME Confidence Tracker, which “surveyed 1,000 UK businesses, finds that SMEs have renewed confidence and appetite for growth, with 68 percent expecting sales to grow in the next six months – an uplift of 7 percent on the figures from its last survey in March 2024.”
Business confidence has rebounded following “the General Election, stabilizing inflation and the recent interest rate decline, and this is set to drive an uplift in business investment.”
Over half of SME leaders (52%) say they are more likely “to make major investments now that the election has taken place, and 63 percent say lower interest rates make them feel more confident about capital expenditure. ”
However, amid speculation that capital gains and inheritance tax rises “could be announced as part of the Autumn Budget, nine in ten (87%) SME leaders cite better tax incentives as a specific measure they’d like the new Government to implement.”
A further 81 percent want access to low-interest financing “for business expansion and job creation.”
Derek Ryan, UK Managing Director at Bibby Financial Services, after a difficult four years smaller firms are starting to feel more confident but the PMs’ “painful budget” may undermine this sentiment.
Access to finance remains an integral part of the growth puzzle.
While data from trade body, UK Finance indicates commercial finance “approvals increased in Q1 2024, the SME funding environment remains difficult to navigate.”
Indeed, half (49%) of SMEs believe the external finance “landscape is complex and disjointed and 80 percent say they would like the Government to introduce better educational resources specifically targeted to smaller businesses.”
And with consumers able to use free online resources “like Martin Lewis’ MoneySavingExpert platform to navigate financial decision-making, two in three (65%) SME leaders wish there was an equivalent resource for SMEs.”
The Labour Party’s plan for business, published in June 2024 included ambitions to improve access to finance by “reforming the British Business Bank and the Bank Referral Scheme – which helps guide SMEs rejected by high street sources to alternative funding sources. Research shows the current Bank Referral Scheme is underutilised, with just 18 percent of SMEs having used it, and a staggering one in three (33%) stating they are unaware of the scheme.”
Ryan explained that the “devi is in the detail” as to how the UK government will support smaller firms.
Sandeep Dhillon, CEO of Talmix, noted that SMEs play an important role in tech and innovation. To avoid a potential “mass exodus” it is more important than ever for the Chancellor to provide clarity as to how both investors and smaller firms are treated; IE taxes, including capital gains and access to capital.
This study is based on research of 1,000 UK SME owners and decision makers “across the manufacturing, construction, wholesale, transport and services sectors.”
The research was conducted by independent specialists, Critical Research, “between 30 July and 13 August 2024.”