The week's small business news in under 5 minutes
Welcome to this week's edition of The Shorthand, your weekly digest of the top news stories that affect small businesses in the UK! Here, we break down the stories you may have missed during the week, detailing what they’re all about and, more importantly, why you should care.
And all that in under 5 minutes.
Go on, put the kettle on and we’ll have you caught up with the most pressing business news stories of the week by the time you’ve finished a cup of tea.
1. 33,000 loans for businesses less than 5 years old
What’s happening here?
Business Secretary Jacob Rees-Mogg has announced the expansion of the Start Up Loans scheme to provide much-needed support to small businesses across the UK.
The Start Up Loans scheme offers new businesses government-backed loans of up to £25,000 at a 6% fixed interest rate, as well as 12 months of free mentoring. It was previously available to startups that had been trading for no more than two years, but eligibility criteria has now been broadened to include startups that have been trading for up to three years – while businesses that have been trading for up to five years can now apply for second Start Up Loans.
Since its inception in June 2012, the programme has provided more than 95,000 loans with an average value of just over £9,000. The expanded scheme will make 33,000 new loans available to businesses that might find it difficult to secure loans from traditional lenders.
Richard Bearman, Managing Director of Start Up Loans, said:
We are delighted to be able to extend the reach of the Start Up Loans programme to help support businesses who need extra support during a time of continued economic unrest.
This extension of the programme will enable us to work with those businesses that had perhaps just got going when the pandemic hit, or are ready to scale up now that they are back on their feet. We want to ensure that these businesses do not get left behind.
Why should you care?
This announcement comes just days after the government’s so-called ‘mini-budget’, which has seen a tumultuous market reaction and a mixed response from the small business community. And like last week's 'fiscal event', the expansion of the Start Ups Loan scheme has proved somewhat controversial.
Some commentators praised the move, highlighting how it puts real cash in small business owners’ pockets therefore providing a potential lifeline to those struggling in today’s tough economic climate. Michelle Ovens, founder of Small Business Britain, said:
The expansion of funding opportunities for start-ups and growing businesses will certainly be welcomed by small firms as a positive move to unleash their potential. Access to finance is vital for entrepreneurs to grow, and with rising costs and challenges across the board they need all the help they can get right now to realise their ambitions.
Elsewhere there have been warnings that small businesses require further equity support rather than increased debt, given the threat of higher interest rates, which are expected to see an even further hike due to the rapidly plummeting pound.
Catherine Lewis La Torre, acting Chief Executive of the British Business Bank, cautioned that without improved financial conditions, the UK is likely to see an increasing number of companies unable to afford repayments – therefore defaulting on their loans.
2. Could a visa scheme review ease the UK’s labour shortage?
What’s happening here?
Prime Minister Liz Truss is set to launch a review of the UK’s visa system in a bid to tackle labour shortages in key industries.
The review could result in changes to the Home Office’s Shortage Occupation List, which would allow selected industries to recruit more staff from abroad. Truss is also said to be considering the easing of English language requirements.
Inclusion on the list makes it easier for international workers to get UK visas by lowering fees and waiving employers’ duty to prove that no local workers are suitable for the role. It also removes the £35,800 salary threshold for settling in the UK after five years.
Broadband engineers are among those expected to be added to the Home Office’s list, in a move that would support the government's pledge to make full-fibre broadband more widely available by 2025. There have also been reports that Truss will remove the cap on foreign labourers working in seasonal agriculture to plug severe farming labour gaps.
Why should you care?
British businesses have been weathering a staffing crisis – often said to stem from Brexit, which has prevented EU workers from filling employment gaps, and Covid-19, which has led to people reassessing their priorities. This summer, a survey conducted by the British Chambers of Commerce (BCC) revealed that 76% of businesses were experiencing recruitment difficulties – while this figure was as high as 83% in construction, the most severely affected industry.
Since becoming Prime Minister earlier this month, Truss has faced renewed calls from leading business figures to take action. The intention to review the UK’s visa scheme has therefore been praised by the business community, who have recognised its potential to ease labour pressures.
Craig Beaumont from the Federation of Small Businesses (FSB) described the move as “positive” news that would “see sectors with a big immediate need for new recruits have their vacancy levels reduced. Meanwhile, a spokesperson from the Confederation of British Industry (CBI) said:
Guarding against skills and labour shortages can simultaneously help keep inflation in check while ensuring firms have the people they need to grow, benefiting everyone.
3. Digital services: yet another challenge for SMEs
What’s happening here?
A newly published survey from Vodafone and the BCC has shed light on the digital challenges faced by the UK’s small and medium-sized businesses.
Surveying around 900 SMEs across the UK, the study highlighted three main areas of concern when it comes to digital services such as broadband, collaboration tools and conferencing tools:
- Time management: Almost one in four (37%) respondents believe they lack the time and capacity to manage multiple suppliers, contracts and licences.
- Flexibility: A quarter (25%) of those surveyed didn’t feel that their digital tools were resilient enough to help protect their business from emerging trends, while 17% said their current suppliers didn't enable them to adapt to changing circumstances.
- Cybersecurity: More than one in five (22%) respondents didn't think their digital tools were secure.
Why should you care?
The survey’s findings come at a time when small businesses are already facing an uphill battle against a crashing currency, rising energy costs and soaring inflation – as well as hiring issues and staffing shortages. Shevaun Haviland, Director General of the BCC, said:
With BCC data highlighting the huge challenges businesses are facing in the current economic environment, now more than ever, they need help wherever they can find it. Finding the right connectivity tools for firms can not only save time and money, it can also help future-proof businesses against further challenges down the line.
Suppliers of digital tools and services must work with businesses, in particular small and medium sized businesses, to ensure that they find their right fit and reap the benefits of a flexible and secure connectivity offering.
Given the numerous pressures facing small businesses, digital services appear to be yet one more thing to worry about. However, the findings of this survey could provide a much-needed push for digital providers to address small business’ concerns and create solutions that truly work for UK SMEs.
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This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer.
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