Alternative finance aggregator NextFin has launched its ‘Free Our Start-ups’ campaign, in a renewed bid to help entrepreneurs and start-ups impacted by the Covid-19 pandemic.
In an open letter to the Treasury, NextFin has called for changes to the Seed Enterprise Investment Scheme (SEIS) and Enterprise Investment Scheme (EIS), which use tax reliefs as a means to incentivise private investors who are willing to invest in early-stage businesses.
NextFin says this would give start-ups equity-based investments rather than accumulating further debt as a result of the government’s emergency loan schemes.
The campaign also called for a temporary rise in income tax relief to 50 per cent for EIS and 70 per cent for SEIS, and also an increase of the SEIS investment threshold to £250,000 and £10m for EIS.
As many start-ups still struggle to access government backed loan schemes such as coronavirus business interruption loans and bounce back loans, NextFin has created a petition.
It has demanded the government invoke the European Union’s General Blockage Exemption Rule (GBER), a mechanism which can be used to provide lawful state aid without going through the normal notification and approval processes.
NextFin said by providing the UK’s most innovative and progressive start-ups with access to long-term capital, EIS and SEIS schemes are hugely beneficial to the UK economy as they create jobs and support the growth of businesses, and ultimately result in higher tax yields for the government.
According to HMRC, over 33,000 investors claimed EIS tax relief on 7,000 companies in 2017-2018.
NextFin said these 33,000 investors can be used to deliver economic stimulus to all eligible small- and medium-sized enterprises throughout the UK.
This follows a similar campaign, the Save Our Start-ups campaign, which in April sent an open letter to the government, backed by peer-to-peer lending platform Simple Crowdfunding, calling for support for start-ups during the pandemic.
Soon after the government then announced £1.25bn in funding for innovative start-ups.
Included within this funding package is the government’s £500m future fund, which offers government-backed loans for start-ups ranging from £125,000 to £5m, subject to at least equal match funding from private investors.
Since the funding package was announced, the Save Our Start-ups campaign has been lobbying the government for the fast and efficient distribution of funds and in May announced it was pleased with the government’s delivery of the future fund.