Financial support for SMEs
Small and medium-sized businesses will benefit from extra support after a £2.5 billion growth capital fund is being invested into a company that provides tax advice and relief for conducting British research.
The fund occurred as a result of the failed Project Merlin lending scheme, an agreement between the British government four of major high street banks
including Barclays, Lloyds Banking Group, the Royal Bank of Scotland and HSBC. The scheme failed to achieve its aim of improving the availability of credit to small businesses, missing the target by £1billion.
A £3.4 million investment is being made into Jumpstart, an Edinburgh-based business that works with 500+ companies to help small businesses apply for research and development relief. This falls under a government backed scheme in which businesses benefit from a reduced tax rate of 10% (usually 23%) in exchange for carrying out their research and development in the UK. The company have said that they will use the investment to expand their operations in sales and marketing. Over the past two years they claim to have saved their clients up to £20 million in tax payments.
The government aim to increase economic growth as a result of schemes such as these funding small businesses. However, the EU has raised concerns that it will give larger companies opportunity to evade tax. High-growth companies that have a relatively small team of staff and turnover of between £5 million and £50 million will be targeted by this investment. If it is more successful than the Project Merlin lending scheme this financial support for SMEs will be a great boost to the British economy.