What will drive SME growth in post-Brexit Britain?
The performance of the SME sector in the coming months is vital. The Brexit economic shockwave has been significant, so growth will not be easy to achieve. If targets are to be hit, alternative finance has to play a key role.
The debate is already raging fiercely over the impact of the EU referendum on small businesses in the UK. One side points to the collapsing pound and the probable loss of access to the single market and the other to lighter regulation and a low corporate tax rate. Whatever happens, small business owners will need a strong financial platform and alternative finance needs to be part of this strategy.
Given the marketplace unpredictability, SMEs need finance services that are flexible, accessible and affordable, and this is exactly what alternative finance products such as invoice finance, asset-based finance and peer-to-peer lending offer. These services are already popular – the use of invoice finance has risen by 7% to over £3.6 billion according to the Asset Based Finance Association – and their use is set to accelerate.
Also, while Brexit has dominated headlines and news feeds, the pressures on capital and cashflow that existed before the vote remain very much in place. According to a new study from the Pensions Regulator, over half of small businesses and start-ups do not think they’ll be able to meet the government’s auto enrolment pension scheme deadline of 2018. Affordability has to be a major cause of this anxiety.
In the wake of the post-Brexit downturn, there have been calls from the likes of the Federation of Small Businesses and the British Chambers of Commerce to further cut the corporate tax rate and to reduce the burden of business rates. These measures would be welcomed by the SME sector, however, in terms of stimulating growth, equally as important is raising awareness of the finance options, including alternative finance, available to business owners and start-up entrepreneurs.
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