The economic climate is now bleak for many small firms
With official figures now showing that the UK is out of recession, small and medium-sized companies can start to plan for a brighter future.
However, with the economy only growing 0.1% in the last three months of 2009, it is likely to take some time yet before the economy fully stabilises.
For that reason, the various government-backed schemes enabling small and medium-sized firms to either delay tax payments, or more easily secure a bank loan, are set to continue for the foreseeable future.
Here is a guide to that assistance, and some of the wider sources of advice on offer to small and medium sized companies.
• The best first port of call for free advice is
, the government's support agency for SMEs in England.
• Broadly similar assistance is available for Scottish firms from
, for Welsh companies from
Flexible Support for Business
, and for Northern Irish businesses from
Invest Northern Ireland
• Each offers free and impartial advice on all aspects of running a small business, including what government grants are available, marketing ideas, how best to pay your taxes, and how to cut your energy bills.
• They all also offer detailed advice on how to best to handle making redundancies, and the procedures to follow.
• The website of the
Department for Business, Innovation & Skills
also has much useful information for small firms.
• Local authorities and regional development agencies (RDAs) such as the
South West RDA
also offer free advice and other services to small companies in their areas.
• Firms should also consider becoming members of private business organisations, such as the
Federation of Small Businesses
British Chambers of Commerce
. Each has a vast array of useful services available to members. Such business groups are also an excellent way of meeting fellow local businesses, offering the chance to share experiences and advice.
DELAYING TAX PAYMENTS
• Under a change first announced in 2008's
, small firms suffering a temporary financial squeeze can now apply to
HM Revenue & Customs (HMRC)
to delay their tax payments.
• Under the
Business Payment Support Service
programme, firms can apply to delay any payments due to HMRC, be they VAT, national insurance or staff income tax.
• With a dedicated telephone support line - 0845 302 1435 - HMRC says most callers will get a decision within 10 minutes. While a small majority may have to wait up to three or four working days.
• There are no penalty fees or surcharges, but an interest payment will have to be paid for each month of delay. The interest payments vary, but a typical level is 4.5%.
HOW TO HANDLE REDUNDANCIES
Business Link website
offers a step-by-step guide to making redundancies, including the required periods of notice, and redundancy payments.
• It also offers a guide on how to avoid having to lay off staff.
• Similar advice is offered by the Federation of Small Businesses and other business organisations.
• However, in almost all cases, small firms should always seek the guidance of a qualified employment lawyer to avoid any legal pitfalls.
SECURING A BANK LOAN
• The government has three parallel
business loan schemes
to try to restore the banks' lending to firms - Enterprise Finance Guarantee Scheme, Working Capital Scheme, and Capital for Enterprise Fund.
• The programme that most directly applies to small companies is the Enterprise Finance Guarantee Scheme.
• Open to businesses with a turnover of up to £25m, it is designed to enable firms to secure loans of between £1,000 and £1m, repayable over 10 years.
• The government guarantees 75% of the loan, with the banks covering the remaining 25%.
• Most businesses in almost all sectors are eligible for the scheme, but those in the agriculture, coal and steel industries are not.
• The guarantees will be available most major banks.
• However, it isn't a free for all. Firms will still have to make their case on merit to their bank, explaining why they need the funds, and showing how they will be able to pay it back.
• During a tough times, many small firms can gain much needed work through winning a contract to supply a public sector organisation, be it a local authority or government agency.
• Almost all councils and other such bodies can advise firms on how to apply for contracts, and what work is available.
, for example, says it spends around £200m each year "on everything from paper clips to construction products, and from food to IT solutions".
• The supermarkets can still be a
rich source of contracts for small firms
. Especially as the sector appears more recession-proof than most - both Sainsbury's and Waitrose reported record sales for the Christmas period. All of the main supermarkets have special programmes to encourage more small suppliers, such as
"Meet the Waitrose Buyer"
, and Sainsbury's
"Supply Something New"
SECURING PAYMENT FROM OTHER FIRMS
• Late payment has always been a main bugbear for small firms that supply larger companies with goods or services.
• To try to improve matters, in December 2008 the government launched a new initiative called the
Prompt Payment Code
. Devised in association with the Institute of Credit Management, signature firms pledge to pay their small suppliers on time, while also offering clear guidance on payment and complaint procedures. Early signatures include John Lewis, British Gas and Asda.
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