The dust is settling on the 2024 Autumn Budget and the reaction from the small business sector has been interesting. Bust or boost? And how are firms going to finance operations and investment into 2025 and beyond?

Budget 2024: bad, good, somewhere in between?

The build-up to the Budget featured plenty of doom-mongering, and there were some tough measures for businesses, but at the same time, there were positives, not least a widespread focus on increasing investment. So, really, a mixed bag.

The rise to employers’ national insurance and the increase in the National Living Wage were the bad points for small businesses, both of which sparked some significant knee-jerk reactions involving claims of layoffs, redundancies and closures.

Heaping more pressure on cash flow and profit margins is the last thing small businesses wanted from the Budget and on the surface these measures do add to the burden. But it is worth pointing out that small businesses have been shielded to some degree from the rise in employers’ national insurance contributions through an increase in the related employment allowance.

There was also some good news with regard to business rates. Although the wide-ranging reform that the small business sector wanted didn’t materialise, retail, hospitality and leisure properties will benefits from lower rates, while the 40% relief framework will stay in place in the short term. Yet another review of the system has been promised by the government.

Aside from business rates, the reaction to the treatment of the corporate tax system has been largely positive, with important investment reliefs remaining in place. The targeting of greater stability has been praised here. Increased investment in workplace training and protection of R&D tax relief has also been welcomed.

Managing cash flow and how alternative finance can help

The reaction to the Budget from the small business sector has certainly grabbed attention, and this is perfectly understandable. Firms have had to weather an economic storm of unprecedented ferocity in recent years and are chomping at the bit to see meaningful growth return.

No wonder they are focused, including on how they are going to manage cash flow and afford investment going forward. One way they can do this is to look more closely at alternative finance.

Services such as invoice finance, asset finance and peer-to-peer lending are proving a vital source of capital for small businesses in the current funding climate (with 65% more SMEs experiencing difficulty in accessing finance from high-street banks). These alternative finance facilities, which offer a more easily accessible, affordable and personalised approach to lending, are helping small businesses survive and target recovery, stability and growth.

This profile has helped cement the reputation of alternative finance in the business sector. Notably, the new Growth Guarantee Scheme will provide a wide range of finance facilities to smaller firms, including asset finance, invoice finance and asset-based lending. This is further proof that alternative lenders are increasing filling the small business funding gap.

Small firm finance options for funding post-Budget investment

The differing reactions to the 2024 Autumn Budget are instructive – perhaps it is case of the sector having become used to short-termism. There are certainly some pain points, but there is also recognition of longer-term thinking and what this means for businesses. In terms of the verdict on the Budget, much depends on how the government’s planning works out – this will undoubtedly colour perceptions in the future.

As such, in a market where bank lending to small businesses remains affected by caution, when it comes to managing cash flow and affording investment, it is important that firms are aware of all the finance options available to them, including the services of alternative lenders.

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