The Confederation of British Industry have called for new tax breaks and alternate sources of funding for small and medium enterprises, in a report which provides suggestions to help UK businesses. The business group have responded to an evaluation of other debt sources by offering possible resolutions to the government. Suggestions for boosting non-bank business funding, increasing demand from businesses and removing obstacles to alternative funding sources have all been included in the CBI response.
Although businesses are currently wary of taking risks in the unstable economy, as the outlook improves companies will need improved access to alternate funding sources to boost recovery and guarantee growth. The CBI also suggest the establishment of a medium sized bond market with new tax incentives and improved infrastructure to increase availability of business funding.
The introduction of tax incentives for a short term, based on the theory of Venture Capital Trusts and making specified investments exempt from tax, would increase investment. SMEs also need to be aware of finance opportunities available other than banks, increasing demand from businesses. The complexity and bureaucracy of alternative finance should also be removed, which will be achieved by the government collaborating with the finance sector.
The director general of CBI, John Cridland said:
“This is as much a problem of demand as supply. Firms need independent help and support to locate the finance that’s right for them. So we must cut through the red tape and complexity surrounding non-bank finance to make it more easily understood by small to mid-sized businesses, which often lack the resources of a larger company.”
Outsourcing is a preferred solution for small companies, who rely on the resources of online accountants.