With a new UK government being voted into office, as you’d expect I’m keeping my eye firmly fixed on what changes might affect the SME finance market. Our commercial lending teams got together some weeks back to think about what we’d want to see from the new government. Here are a few issues that we believe the new government should consider:
Increase, or at the least maintain, the current Annual Investment Allowance.
In April 2014 the government doubled the Annual Investment Allowance as part of its efforts to support the UK manufacturing industry, and it worked. We have seen an increasing number of our customers making real inroads into export markets, selling their products across the globe as a result.
A healthy investment allowance means businesses are able to make serious investment plans. We have seen a number of changes to the allowance in recent years, but the latest boost has provided favourable conditions to encourage investment in UK SMEs, and we need more of the same from the new government.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Ensure a coordinated and joined-up approach on government support schemes.
Aldermore fully supports any initiative that encourages lending to businesses. Schemes such as Funding for Lending and the establishment of the British Business Bank (BBB) have been, and can continue to be, successful in helping lenders support SMEs. However, we believe the new government needs to establish a more joined-up approach to these schemes.
We think the new government needs to seriously consider drawing on the BBB’s established financial services expertise to better manage all of these programmes that encourage and support long overdue business investment. The BBB should also consider developing new initiatives based on those successfully run by the European Investment Bank.
Improve awareness around cybercrime and security.
The vast majority of businesses now rely on the internet, but as technology becomes more sophisticated, so do hackers. IT security and the growing use of cloud storage is a major issue for small businesses and any future government must support firms in overcoming these problems.
Government should work with large software suppliers to sponsor key basic security software to minimise attacks on SMEs. This would be provided to SMEs free or at a discount.
Reward businesses who save for a rainy day.
ISAs are the most popular type of personal savings accounts, providing up to £15,000 tax-free relief per individual per year. We believe the next government should consider rewarding SMEs in a similar way, by providing tax breaks for the amount of savings they hold.
This would work in a similar way to a retail product whereby SMEs can earn interest without paying tax while the funds remain within the ISA wrapper. This should be targeted at particularly small or new businesses to help encourage savings which will help liquidity. Limits should be set based on the size or tenure of a business so that the limit grows as they do, to a certain point.
As the new government finds its feet Aldermore will be working to get these changes considered so that the UK SME industry continues to thrive.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataCarl D’Ammassa is director of asset finance at Aldermore
