C+. Positive with some bright spots but could do better. That’s the small business owners’ verdict on the 2016 Budget, a report card that puts more focus on alternative finance going forward.

Generally speaking, the Budget was a good one for small businesses, but there is the feeling that it could have done more to stimulate growth in the sector. There were some significant pluses for SMEs, including a reduction in business rates, cuts to capital gains tax and corporation tax, and cuts to commercial stamp duty. It’s notable that the small business sector has been able tick off a few items on its
pre-Budget wish list and the Chancellor’s efforts have drawn praise from the likes of the Federation of Small Businesses, the Forum for Private Business and the British Property Foundation.

However, there is a consensus that opportunities have been missed. There was nothing on a late payment, a long-term bête noire for small business owners, and more could have been done in the area of business tax reform and in terms of cutting red tape. Furthermore, business leaders have expressed disappointment that more wasn’t done to combat continued caution from traditional business lenders and promote the benefits of alternative finance. Services such as invoice finance, peer-to-peer lending and crowdfunding are giving small businesses room to breathe in the face of closed doors elsewhere.

Disappointment with the Budget stems primarily from the sense of threat posed by current economic uncertainty and developments such as the National Living Wage, pension auto enrolment and the Apprenticeship Levy. These kinds of headwinds put a question mark against small business owners’ ability to increase productivity and stimulate growth, and that’s where the concern over finance comes in. To generate growth, SMEs need to access additional working capital and there needs to be a clearer path in this regard – this is why we’re talking about a greater focus on alternative finance.

Alternative finance is growing rapidly, helping stimulate some of the SME sector growth that government so desperately wants to see. But acceleration is required and this is why the government, as well as financial institutions and industry bodies, has a responsibility to do more improve accessibility to the likes of invoice finance.

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