Small business owners will have woken up this morning to a Bank of England interest rate cut and a Budget focused on boosting their businesses.
It comes amid warnings of tough times ahead by chancellor Rishi Sunak, who delivered in his first Budget against a backdrop of rising panic over the coronavirus pandemic.
“There is likely to be a temporary disruption to our economy,” he said during an hour-long Budget speech in Parliament.
“On the supply side, up to a fifth of the working age population could need to be off work at any one time.
“Business supply chains are being disrupted around the globe.
“This combination of people being unable to work and businesses being unable to access goods will mean that for a period our productive capacity will shrink.
“There will also be an impact on the demand side of the economy, through a reduction in consumer spending.
“The combination of those effects will have a significant impact on the UK economy.”
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However, he insisted this will be temporary.
“Supply chains will return to normal,” Sunak added. “Life will return to normal. For a period, it’s going to be tough. But I’m confident that our economic performance will recover.”
It is with this in mind that small- and medium-sized enterprises (SMEs) will have been boosted by the Bank of England’s interest rate cut and a package of measures in the Budget include reimbursements for sick pay for those suffering from coronavirus.
Additionally, SMEs will be able to access a £1.2m temporary coronavirus business interruption loan scheme, with a guarantee of 80 per cent on each loan by the government.
This will provide access to loans and overdrafts so firms can pay people’s salaries, pay their bills, or buy new stock.
SMEs will also be given more time to pay taxes.
There were more wide-ranging non-coronavirus measures such as the prospect of more financing from the British Business Bank and the scrapping of business rates for high street firms with a rateable value below £51,000 for the next financial year.
Additionally, the Employment Allowance was increased from £3,000 to £4,000, giving SMEs a bigger discount on their national insurance tax bill, while entrepreneurs relief on the sale of a business was saved rather than scrapped but reduced from £10m to £1m.
Trade body the Federation of Small Businesses (FSB) described it as a pro-small business Budget which echoed much of its wish list.
“The measures put forward– coupled with those unveiled by the Bank of England this morning – should go a long way to reinjecting optimism back into the small business community after years of uncertainty,” Mike Cherry, national chairman of the FSB, said.
“It was encouraging to hear the Chancellor saying he will take forward our proposals for reform of entrepreneurs’ relief, and we look forward to working with the Treasury to protect the thousands of everyday entrepreneurs who make use of this incentive to help fund their retirement every year.”
P2P platforms have also said they look forward to being able to supporting SMEs through the outbreak.
“We welcome the measures announced and are pleased that the government is supporting small businesses through the worst of the coronavirus outbreak,” Lisa Jacobs, UK managing director at Funding Circle, said.
“We also believe by working together with the government, lending platforms like Funding Circle can play a crucial role in supporting thousands of hardworking SMEs across all regions and sectors of the UK.
“We stand ready to help mitigate the impact of this terrible outbreak.”