December 2013

UK SMEs encouraged to use €3 billion development pot

UK SMEs have been encouraged to apply for business development funding from the European Commission in January 2014. Businesses can apply for up to €3 million each from the Horizon 2020 fund. Unlike previous funds and grants from the European Commission, SMEs receive all of the money to spend as they see fit with a further 15 days of free coaching paid for directly by the European Commission.

Pera Technology, partnering the European Commission and Horizon 2020 Fund have encouraged British businesses to apply for funding to develop their businesses from the 1st January 2014, when the fund opens. It will most likely benefit manufacturing and engineering firms, seeking to develop their own products in the next few years. 

In order to be applicable for the larger research and development fund businesses must demonstrate market demand and there is a further €50,000 lump sum available to business for this purpose. SMEs can also claim for up to 15 days free of charge coaching to help drive their product to market. To find out more information, go to http://www.peratechnology.com/.

If your business has spent money on research and development for an innovative product (e.g. developing systems and technology, creating a product or producing a treatment), you may be eligible to Research and Development (R&D) Grants. Please contact us to find out if you are eligible and our partners may be able to help you claim back money in the form of grants and tax relief on products/ services you’ve already spent R&D money on.

UK Alternative Finance Benchmarking Survey

In the last year, the alternative finance market boomed, providing more finance to SMEs. Crowdfunding and peer-to-peer lending platforms are frequently providing finance for businesses and possibly becoming a threat to mainstream banks. Research at Nesta, University of Cambridge and UC Berkeley was released last Friday, showing that over a third of the businesses receiving funding from Crowdcube (a crowdfunding website) thought they could not have raised money anywhere else.

The rise of alternative finance against incumbent banks could be a common theme for 2014. With business owners increasingly struggling to get finance from banks, the success of alternative funding platforms has risen considerably over the year. 

Business Funding – A not so gloomy outlook

Despite the anticipated predictions that business funding would increase by 2% this year, it actually went down by approximately 5.5%. Lord Bamford, CEO of JCB construction company, commented this weekend that it was absolutely crucial for UK investment to rise dramatically in order to sustain the economy.

The private sector are however making new funds available for SMEs. The large audit firm KPMG has committed £20m into technology investment in the next year, whilst online commerce giant Amazon offers alternative finance and loans for sellers to apply for.

Superfast Business Broadband Funding

Culture secretary Maria Miller recently announced that the government is making £100 million available to small businesses to help them access faster broadband. This is part of the Super Connected Cities programme, which will give SME’s the opportunity to apply for £3000 ants to enable super fast broadband services. This is part of a drive to ensure the UK becomes the best place in Europe to do business.

In addition to this, the UK Government has already provided almost £57 million to the Welsh Government in order to ensure that broadband access is available to homes and businesses in some of the hardest to reach parts of Wales.

The cities eligible today are Belfast, Salford, Portsmouth, Cardiff, Derby, Bristol, Edinburgh, Newport, London and Manchester.

For more information about the grant, click here.

Bank of England Report on Lending Figures

Recently, the Bank of England published a report on lending figures to SMEs in the UK. The data shows that bank lending to SMEs has reduced from £6bn (Nov 2011 – Oct 2012) to £3.7bn (Nov 2012 – Oct 2013). However this funding only includes information from 19 lenders (which were not specified) and does not include other types of funding such as equity and the popular crowd-funding (e.g. Crowdcube).

More recently however, The Bank of England said that net lending by banks who are taking part in its Funding for Lending Scheme had increased 300% during Q3 this year. This is encouraging news for SMEs, startups and high-growth companies, although according to John Longworth, CEO of the British Chambers of Commerce, it is still difficult for cash strapped businesses to access finance.

To find out more about funding options for your business, visit www.businessfunding.co.uk.

Autumn Statement: What does it mean for your business?

Chancellor George Osbourne delivered the Autumn Statement on the 5th December 2013. What does this mean for your business?

In summary, the economy is growing positively, which means raising finance for your business will be cheaper due to lower borrowing costs.

For businesses, some of the main cuts include:

  • introducing a cap on the Retail Prices Index (RPI) increase in business rates in England to 2% in 2014-15
  • introducing a £1,000 business rates discount to help the high street
  • doubling the Small Business Rate Relief for a further 12 months from 1 April 2014 to help 540,000 firms
  • making it cheaper for businesses to employ young people by abolishing National Insurance contributions for under-21s earning below £813 per week
  • introducing a new tax relief for shale gas and support for the creative industries

Some have criticised Osbourne’s plans, saying that these figures are not matched with the fundamental reforms, which will cause instability for firms, according to the Institute of Fiscal Studies. Businesses are unsure as to how long this tax relief will last for next year.

To find out about how you can apply for bank loans for your business, click here.

Payday loan interest rates to be capped

The government recently announced regulations for 2015 which will force payday lenders to cap the amount of interest they can charge when lending to customers. This will prevent spiralling debts if the consumer can’t afford to repay the loan.

Payday loans

Currently, payday loan companies charge 1000-6000% APR (annual percentage rate) – this means that for a £400 loan at 3000% APR, borrowing for one month would cost the consumer £145 interest (on top of the original cost of the loan), £343 for two months, and a whopping £16000 interest fee for borrowing for a year. According to this BBC website.

The BBC Three documentary Young, British and Broke: The Truth about Payday Loans showed the stories of young people who ‘refinanced’ initial payday loans to pay other companies outstanding loans.

For a business, there are several options for obtaining immediate cash advances. If your business turns over substantial credit or debit card sales, you can sell ‘future’ payments for upfront cash – this is known as a cash advance. There are also many types of short and long term loans to provide working capital or cash flow for the business, particularly if the business has existing assets (e.g. personal or commercial property) or has a healthy turnover. For businesses which may have outstanding invoices which need to paid, yet need money to inject into the business upfront, there are invoice factoring and invoice discounting options.

Britain's Business Bank has been given an extra £250m funding

Nick Clegg has pledged to put an extra £250m into the British Business Bank to help small businesses who struggle to get loans from the bank.

This is part of a week-long scheme to address Britain’s ‘big long-term problem in our banking system’.

The fund will allow small and medium-sized companies to get the investment they need to grow and take on more staff. The British Business Bank, which is being set up in Sheffield, is a state backed economic development bank, which works with over 70 partners to help unlock funds for smaller UK businesses.

Further information about the types of funds available for your business can be found here or here.