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UK small businesses call for emergency budget for no-deal Brexit

The UK’s Federation of Small Businesses has called for Chancellor Sajid Javid to propose an emergency budget to counter the threat of a no-deal Brexit.

The FSB, one of the largest business groups in Britain, said on Tuesday the Treasury must prepare as the pound continues to fall and a no-deal looms.

It demanded a blanket cut of employer national insurance contributions from 13.8% to 12%. The reduction in employer NICs would save businesses £11bn, which would help them mitigate the surge in staffing costs, the FSB claimed.

The group also recommended an uprating of the £3,000 employment allowance, an extension of the HMRC’s flexible payment plans and leniency reserved for firms in financial distress, to the wider small business community.

It argued that doing so will allow small firms time to prepare for potential changes to trading arrangements and economic conditions.

Other recommendations include reducing the VAT rate to 17.5% from 20%, increasing VAT turnover threshold and providing small businesses Brexit vouchers of £3,000 to assist with planning, accessing new markets, retraining staff and retooling.

The government has already set aside about £6bn for no-deal preparations, with £108m for supporting small businesses.

The FSB had previously recommended that the prime minister look to include a statutory sick pay rebate and a modernisation of business rates.

“With the UK set to leave the EU on 31 October, we need an emergency budget before Brexit happens. It’s time for this government to get serious about planning, and preparing the economy,” said Martin McTague, FSB’s policy and advocacy chairman.

He said ad campaigns and small measures focused on a few exporters won’t work.

“Cash is king for small firms, so we urgently need measures that will allow them to sure-up balance sheets, keep hiring, and help them prepare for an uncertain future.

“We’ve been dogged by disappointing economic growth for years … we need interventions on the domestic front. Making business rates fairer, supporting those struggling with employment costs, and investing in infrastructure would give small firms a new lease of life.”

Labour’s shadow minister for small businesses Bill Esterson told Yahoo Finance UK that “no-deal would cause our economy to plunge off a cliff and threaten the livelihoods of millions of small business owners and staff.”

He added the priority must be “to stop the disaster of no-deal.”

Best for Britain, a pro-EU group, said FSB’s call for emergency budget shows the “immense pressure” businesses are put under by Brexit.

Chief executive Naomi Smith told Yahoo Finance UK: “Despite Leave campaigners promising Brexit will be the end of bureaucracy, it’s clear that leaving the EU will tie-up businesses in red tape. Businesses around the country are warning they may have to relocate because of this disastrous process. It’s time to stop the rot.”

Yahoo Finance UK has approached the Treasury for a comment.

By Ben Gartside

Source: Yahoo News UK

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Small businesses get no-deal Brexit survival guide amid fears firms are not ready

Small businesses have been issued with guidance on how to prepare for Brexit amid increasing fears SMEs are not ready for a no-deal.

UK Finance – the trade body for the UK’s banking and financial services sector – has urged businesses to speak to their banks about extra finance as soon as possible and consider the impact of potential changes to trade arrangements.

It said the industry had the capacity to support businesses “whatever the outcome.”

Firms have also been told to capitalise on the opportunities of Brexit to maximise growth in an online guide published this morning.

Earlier this month Bank of England governor Mark Carney warned that half of UK businesses were not ready for a no-deal Brexit, according to it various recent surveys.

As uncertainty around Brexit looks certain to go down to the wire, UK Finance has issued guidance for SMEs on how to prepare for Britain’s departure from the EU.

The campaign has also been backed by the Federation of Small Businesses (FSB), the British Chambers of Commerce (BCC) and the Confederation of British Industry (CBI).

“The banking and finance industry has the capacity to support viable businesses whatever the outcome,” UK Finance chief executive Stephen Jones said.

“Any business customers who may have additional financing requirements should begin engaging with their provider now, as the earlier they do so the easier it will be,” he added.

The online guide lists sector specific information hubs to help firms develop contingency plans and provides details on how each bank has committed to help firms around Brexit uncertainty.

Businesses that don’t export or import directly have also been urged to check with customers and suppliers to pre-empt any changes.

FSB chairman Mike Cherry said: “With less than 40 days to go until the UK leaves the EU on 29 March, it’s important for small businesses to prepare for the pressures that may well affect them, especially if we end up with a no-deal Brexit on that date.

He added: “As part of that preparation, we recommend that small business owners and the self-employed talk to their banks or other finance providers as they may well need help to extend overdrafts, seek extra finance or secure extra flexibility for repayment plans.”

Source: City AM

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How Invoice Finance could drive the UK economy following a no-deal Brexit

With the details of Theresa May’s recent Brexit deal pushing cabinet members to resign, and a seemingly long road ahead before a draft deal is passed by the UK parliament, a no-deal Brexit is becoming more than just a worst-case scenario.

Small-to-medium-sized businesses are making more conscious efforts to put serious contingency plans into place, as a result.

A CBI survey on Brexit preparedness this year stated that more than 50% of businesses had examined different Brexit scenarios, and more than 60% had begun developing contingency plans in the event of no deal.

However, findings from the same survey showed that 77% of businesses said the number of potential scenarios made planning for Brexit challenging. Amid all the uncertainty, the question remains, what can SMEs do to keep a strong economy post-Brexit?

A study published this year by Equiniti could have highlighted Invoice Finance as the answer. The report demonstrated a close correlation between the level of business borrowing and rising Gross Domestic Product (GDP); connecting the two makes a strong case for Invoice Finance being an optimal way to fund business growth in the wake of a cliff-edge Brexit.

Understanding the threats

So what happens if we depart from the European Union with no concrete agreement? Where does that leave the small business owners of Britain?

One of the biggest talking points surrounding life post-Brexit falls on the dissolution of a transition period. Without a deal in place before exiting the EU, we would need to revert to trade on the basis of World Trade Organisation rules in a matter of days, meaning businesses would need to be ready to react to the changes, and fast.

CBI data shows 48% of businesses that had completed scenario planning found the main difficulties related to the costs incurred for internal resources or for hiring external help.

With no implementation period, increasing costs attached to simple business essentials, additional tariffs and the anticipated fall in sterling, SME survival could be in real jeopardy.

Numerous organisations including the Centre for Economic Performance at the LSE and the OECD have raised concerns that the WTO scenario may reduce UK GDP by up to 10% or more, which could result in company earnings and stock prices reducing with it.

These unfavourable outcomes could act as deterrents to potential investors looking for investment opportunities, placing further pressure on the types of funding available for SMEs.

To survive a no-deal Brexit, UK SMEs will need to find quick and accessible ways to acquire and maintain healthy cashflows, source new suppliers, and access funding facilities that grow in line with their business to help pay unexpected tariffs, charges and taxes.

However, searching for the best most relevant methods of financing and investment will be difficult in the current climate, leading many to query which kind of financial backing is the most viable for SMEs post-Brexit?

Connecting the dots

There are a small number of financing options that allow SMEs to borrow large sums of money without having equally large minimum turnover requirements.

There are even fewer that also provide flexibility, competitive prices and the kind of quick turnaround decisions that will be necessary to keep the economy afloat post-Brexit.

One of the main sources of funding that adheres to all the above is Invoice Financing, and it is this option that may well hold the key to the betterment of the UK economy.

Invoice Finance is a way for businesses to borrow money against the outstanding amounts due from their customers. Businesses pay a small percentage of the invoice amount to the lender as a borrowing fee which allows business owners the financial flexibility to access working capital.

Findings from the Asset Based Finance Association (now known as UK Finance) show that Invoice Finance is already popular amongst SME’s, with the amount advanced to the UK’s smallest businesses jumping over 60% within just a year. The goal here will be for SMEs to continue this pattern after Brexit decisions have been made.

With small and medium enterprises totalling 99.3% of all UK private sector businesses, the loss of capital from this sector could stifle business growth and impact the overall strength of the British economy.

To stop this from happening, small-to-medium sized businesses need to continue growing and thriving, with strategic lending solutions such as Invoice Financing acting as a brilliant way to adapt confidently after Brexit has passed.

Source: Asset Finance International