New package of measures to help small firms

Small Business Minister Mark Prisk has hosted a Summit for Small Business and set out a cross Government package of measures to help the five million small and medium companies in this country grow and boost enterprise across Britain.

These businesses will be vital to economic growth as they are at the heart of the economy, providing 60 per cent of jobs and half of GDP. But despite 66 per cent of small and medium-sized enterprises (SMEs) being ambitious to grow within two to three years, just 20 per cent expand their workforce each year.

To help translate small business aspiration into action, Ministers from Department for Business, Cabinet Office, Treasury and Communities and Local Government have announced three major policies to:

• improve access to finance;
  
• make it easier to do business with the public sector; and
  
• allow social tenants to start up their business at home.

Government achievements for small business are published in a document entitled: 'Backing small business'. (.pdf)

Mark Prisk MP Minister for Business and Enterprise Mark Prisk said: "As a former small business owner I know how important our SMEs are to the growth of this country. I entered government with the goal of making this the most entrepreneurial decade in our history and I'm confident these announcements will help make that a reality."

Improving access to finance

The Government is committed to ensuring there are a wide range of finance options available to small business looking to expand. In July the green paper, Financing a Private Sector Recovery, was launched and received over 180 submissions. In response the Business Secretary Vince Cable and Chancellor George Osborne have announced several major policies.

• Continue the Enterprise Finance Guarantee (EFG) for the next four years, making around £2 billion available to viable small companies without a credit history or collateral. This will provide support to 6,000 SMEs a year. Make it easier for small and specialist lenders, such as Community Development Finance Institutions to lend under EFG, supporting companies in disadvantaged communities.
  
• The Government will commit a further £200m to Enterprise Capital Funds supporting equity investments in the highest growth potential businesses over four years, and it's anticipated the first of the new funds will be investing early in the new year.
  
• To encourage 'business angel' investments government welcomes the joint bid of business angels and the Government's SME investment arm, Capital for Enterprise, for a co-investment fund as part of the Regional Growth Fund to support angel investments into high growth potential early stage SMEs, particularly in areas worst affected by public spending cuts.
  
• The Government will also work with banks on several areas launched in their response to the green paper, the Business Finance Taskforce. This includes the £1.5 billion Business Growth Fund, mentoring and a new lending code.

Making it easier to do business with the public sector

The Government has said that it is committed to ensuring small businesses can maximise opportunities through the wider public sector and has set a goal to award a quarter of Government contracts to SMEs. Departments are expected to fulfil this aim and increase their rate of SME procurement each year. They will also work with all Government agencies to remove those barriers that prevent small businesses accessing government contracts.

From December 2010 there will be a standardised Pre-Qualification Questionnaire, developed in co-operation with SMEs through the Federation of Small Businesses, and its use will be mandatory across central Government.

The Government also reaffirms the commitment that 80 per cent of prime contractors are paid within five working days. All Government contractors will be required to pay their suppliers within 30 days if they wish to benefit from departments' procurement. For central Government construction contracts - a key area of spend - the commitment to payment within 30 days has been made a contractual requirement and applies through the supply chain.

Minister for the Cabinet Office Francis Maude said: "We believe small businesses and social enterprises have a vital role to play in the growth of the UK economy and we are committed to making it easier for these organisations to compete for government business.

"This package of measures announced by the Cabinet Office will help to remove the barriers many small businesses face and eliminate complexities and waste in the procurement process. They will also ensure we are on our way to hitting our aspiration that 25 per cent of government contracts go to small and medium enterprises."

Social tenants

There are currently barriers preventing social tenants from applying to start up a business based in their home. The Government has announced that it will remove those barriers and work with social landlords to encourage their tenants to develop entrepreneurial skills.