SPRING 2023 BUSINESS CREDIT MONEYS TOO TIGHT TO MENTION Government urged to help after report shows firms finding it tougher to access finance Finding and being approved for funding is getting harder for small firms, a recent report has found, with less certainty about where to go for information on the types of finance available. There are also fewer options on offer and higher interest rates. According to a recent report, Credit where credits due, issued by the Federation of Small Businesses (FSB), two-thirds (66%) of small firms plan to make some form of investment in their business by 2024, but fewer than half (49%) feel fully aware of the financing options available to them. Access to finance is vital because it allows firms to invest and grow. It could also keep small firms afloat during this cost-of-doingbusiness crisis, skyrocketing energy prices, supply and travel disruption, and the everpresent scourge of late payments. Three in five small firms (59%) have applied for finance over the past five years, although, collectively, they are around 36bn more in debt than they were in January 2020 because of the extraordinary impact of the Covid-19 pandemic. Access to finance is vital because it allows firms to invest and grow. It could also keep small firms afloat during this cost-of-doingbusiness crisis Only two in five small businesses (38%), however, feel that it is easy to find answers to their questions on financial applications, while three in 10 (29%) believe unfair clauses and provisions are included in applications. The success rate of finance applications has dropped precipitously since the era of Covid loans, with fewer than half (46%) of the applications being successful in Q3 2022, compared with a pre-Covid success rate of nearly two in three (64%). The FSBs research found that the smaller a business is, the less likely it is to be approved for finance. Interest rates offered to small business customers have also risen: nearly a third of firms that applied for finance in Q3 2022 were offered a rate of 10% or above. Help at hand Setting up a business from scratch may seem daunting, but there are plenty of sources of help and advice. The Gov.uk website explains the different types of business and what they mean, as well as the practical obligations involved in starting a business. It can also offer help and support with your business plan, dealing with tax, and employment law. For advice on running your business to help it grow and maybe find grants to finance it contact your Local Enterprise Partnership. The Business Companion website, written by Trading Standards officers, is also an excellent source of advice on how to sell your product or service and the laws that apply if you are selling online. If you need in-depth advice about a particular subject, there are many trade organisations out there. You may have to join them, but talking with likeminded people may be invaluable to you and your business. Business advice is also available from your local Trading Standards department. In its report, the FSB sets out recommendations for action the government and others could take to improve the funding and investment landscape for small firms, including introducing a VAT-based capital investment incentive. Reversing the recent decision to cut research and development tax credits would also send a strong signal that the government is listening to what small firms need, says the FSB, which acknowledges the recently announced consultation on late payments as a positive step. However, it would like to see the audit committees of large corporates publish the details of payment practices in their supply chains in their annual reports. Credit: Karen Woolley, development manager, Federation of Small Businesses Image: Shutterstock / Ariya J For more about the report and the federations other work, visit the FSB website. For further information, please contact your local Trading Standards Service For up-to-date news stories and information, follow us on Anonymous Hotline 0300 303 2636 Is your sector being undermined by unscrupulous traders operating outside the law? Report them via Trading Standards Anonymous Hotline or online and help level the playing field for honest businesses.