The dust has finally settled on the mini-Budget. At first glance, there were many positives for small firms, but with the pound hammered and one U-turn already made, questions mount about the robustness of the measures. How should firms react?

Why small businesses are cheering the mini-Budget

First things first: the mini-Budget contained many benefits for small businesses and these were widely welcomed. The sector has long campaigned for specific tax cuts and some of these wishes were granted by the new Chancellor in his pro-business Budget.

The much complained about increase in National Insurance, introduced earlier this year, has been scrapped – effective from early November – while the planned rise in corporation tax has also been binned. In addition, the basic rate of income tax will be cut and the increase in income tax on dividends has been reversed.

At the same time, the rollout of the Energy Bill Relief Scheme was confirmed, which will provide support for businesses with regard to energy bills until spring 2023. Other measures included the scrapping of plans to reduce the Annual Investment Allowance level and the simplification of the IR35 framework.

Why small businesses should question the mini-Budget

While there was much for small businesses to cheer about in the mini-Budget, there were some notable omissions, with no action on the VAT rate for businesses, late payment and business rates. The latter is particularly significant given the state of the economy.

However, the main focus of concern relating to the mini-Budget has been its impact on the pound and what this means for businesses and spending power in general. Furthermore, the abrupt decision to reverse the cancellation of the 45% income tax rate has done little to settle nerves about the package of measures and the overall government.

The issue of longevity is an important one – already raised pre-Budget in relation to the relatively short lifespan of the Energy Bill Relief Scheme (six months). The pro-business Budget has delivered many positives, but if the pound and spending power take a long-term hit, will these measures make enough of a difference, if any? Furthermore, if the government doesn’t make the new year, what future does its policies have?

Accessing capital and how alternative finance can help

The uncertainty caused by the mini-Budget has done much to take the shine of the bundle of pro-business measures. This underlines the need for small firms to have the right planning in place and at times like these, ensuring access to capital is a critical part of this strategizing. This is where the services of alternative lenders can help.

In the wake of prolonged caution from traditional lenders, which is an issue that has returned during the pandemic and amid challenging market conditions in 2022, services such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses.

These facilities, which offer a more easily accessible and personalised approach to lending, are helping small businesses survive and target recovery, stability and growth. Notably, alternative lending has played a prominent role in the government’s headline emergency support schemes, including the Recovery Loan Scheme. This profile has helped cement the reputation of alternative finance in the business sector.

Planning for 2023 and small firm finance options

The mini-Budget has undoubtedly ticked many boxes for small businesses, but the wider impact of the measures, both on the economy and the government, has overshadowed these benefits. This development highlights the importance of proactive planning for small firms, including being aware of all available finance options.

To find out more about A&T Business Associates services, contact Tony Hedger on 01903 602211 or tony.hedger@atbusinessassociates.co.uk.