Right to Reply: Entrepreneurs left out in the cold by Budget

Yesterday’s UK Budget went some way to help small firms, cutting red tape and offering tax credits, but did it do enough? Luke Lang co-founder of equity crowdfunding firm Crowdcube looks at how the government can do more to help entrepreneurs and get the UK economy moving in the right direction.

Today’s budget shows that the Government is listening to small businesses and trying to simplify tax and red tape as well as provide additional tax reliefs like the R&D tax credits. This is great news. And while start-ups have also been acknowledged by piloting the introduction of the new Enterprise Loans that will make it easier for young people to start their own business, older entrepreneurs are left out in the cold. Many of the entrepreneurs that visit Crowdcube to raise equity finance will still be subject to the risk-averse scrutiny and high interest rates posed by banks for small business loans.
The new National Loan Guarantee Scheme (NLGS) is lipstick on a pig in that regard. A business that successfully raised finance on Crowdcube was offered a high-street bank loan with an eye watering 15 per cent interest rate. I doubt it 14% would have made a difference to those tears!
Private investment that comes from individuals through new e-finance solutions such as peer-to-peer lending or crowdfunding are already proving a viable alternative that will do more to provide much needed finance to boost SMEs in Britain than expensive and headline heavy Government Schemes.
Other budgetary announcements due to come into effect this April such as the new Seed Enterprise Investment Scheme, are also good news for the start-up funding challenge as they will encourage private individuals to invest.
Doubling the cap on Entrepreneurs Relief however is focused on the businesses exit rather than its early stage growth since qualifying entrepreneurs only benefit once they are successful. What start-ups really need is support structures and access to appropriate source of finance in the early stages of the businesses development if they are to thrive.
There needs to be more recognition of early-stage small businesses and fewer barriers to funding for small businesses in Britain. The UK government should follow in the footsteps of US government with its new crowdfunding bill that is designed to ease the regulatory burden on firms trying to raise equity finance from the general public.
By Luke Lang
Co-founder
Crowdcube
http://www.crowdcube.com/