Access to finance 

Small businesses are being promised the world as the next General Election looms closer.

Political parties will peel grapes and whisper sweet nothings in a bid to seduce the ‘backbone of the UK economy’.

‘Governments don’t create wealth, you do,’ politicians say to small businesses. Add to that pledges to reverse rises in corporation tax, conjure up tax breaks, and make access to finance more straightforward, and you quickly find yourself wondering how realistic these promises are.

Unfortunately, it has never happened like that in practice (a cynic might say the history of politics demonstrates the folly of optimism). At a recent event held by BT, the former head of the CBI, Digby Jones, said: ‘One of the great problems is what politicians actually do [when they get into power]. There are always lots of initiatives.’

Given the public debt, any promises of tax breaks need to be treated with caution. There seems to be little appetite for discussing the cuts needed in the public sector, which is not surprising as 20 per cent of the UK is employed in that area (postal strikes are just the beginning, you suspect). Moreover, the relative stability of the economy at present can largely be attributed to quantitative easing. That money won’t be available next year.

However, the question of access to finance is an interesting one. The individuals at regional development agencies and other bodies that are there to assist small businesses are often hard working and passionate about what they do, but it’s no secret that a shake up is long overdue.

When broken down by region and sector, there are a bewildering number of organisations and sub-divisions (I tried counting and gave up) that leave small business owners and those wanting to start a business scratching their heads in puzzlement. If there is a system, it’s a confusing one. The lack of cohesion and communication between the different organisations is perverse. Bureaucracy dictates process, which is the enemy of common sense.

At SmallBusiness we have written a number of articles on start-up funding, grants and loans and bank financing.

There is no such thing as easy money – having a good business idea alone is never going to be enough in itself to get backing, and nor should it be. But whoever takes up residency at Number 10 in May would do well to see how the process of accessing finance could be made a whole lot easier. I may be wrong, but I suspect we’re making the question of finance for small businesses a lot harder than it needs to be.

Don’t be afraid to send in comments about what you think needs to be done to help small businesses and start ups.

Related Topics

General Election

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