The government’s ‘Backing Your Business: Our plan for small and medium sized businesses’ outlines a long-term direction to support the UK’s small and medium-sized enterprises (SMEs).
SMEs, including the self-employed, are integral to our economy – making up 99.8% of the business population. With 5.5 million firms providing 60% of private sector jobs and generating over £2.8 trillion in turnover, this part of the economy rightly warrants sustained investment and support.
In 2023, only 40% of SME employers reported increased turnover – down 6 percentage points from 2022. Amid rising costs, this decline signals a growing challenge that must be addressed. The Backing Your Business plan highlights that accelerating SME growth by just 1% each year could add £320 billion to the UK economy by 2030.
Access to finance
A key component of the government’s plan is to improve access to finance – more than £4.5bn is being allocated to the British Business Bank – enabling them to extend or expand four key initiatives:
- The Growth Guarantee Scheme has been extended to 5 April 2030. This is the successor to the Recovery Loan Scheme and is designed to provide access to finance for smaller businesses. Businesses can use the finance for any legitimate business purpose, including managing cashflow or working capital requirements due to disruption caused by changes to global tariffs.
- The Start Up Loans Programme has been expanded to provide 69,000 loans, with an expected increase in average loan size from £12,000 to £15,000. This loan is focused on new businesses that have been trading for less than three years.
- The capacity of the ENABLE Guarantees Programme has been increased from £2bn to £5bn. The guarantee covers a portion of losses on a portfolio of debt finance facilities. Delivery Partners use the benefit of the guarantee to increase lending to SMEs. The increased capacity will enable the Bank to support more finance providers to scale their support to smaller businesses.
- The Regional Angels Programme has been allocated an additional £340m – a 30% uplift. The programme helps reduce regional imbalances in access to early stage equity finance for smaller businesses across the UK.
Tackling late payments
Late payments continue to be a major challenge for small businesses, costing the UK economy nearly £11 billion annually and forcing 38 businesses to close every day. Proposed legislation aims to address this by introducing stricter maximum payment terms, mandatory interest on overdue invoices, and penalties for large firms that consistently delay payments.
