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Financial news round-up for Small Business

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by Startacus Admin

Welcome to the Startacus monthly financial news round-up, brought to you by Sophie Turton of Crunch Accounting, which explores the most important financial news for small businesses - alreadyFinance news for small business 2014 seems high-geared to be a year of growth for startups and SMEs.

The global economy is on the up

The world bank has happy projections for 2014. Its newly released Global Economic Prospects (GEP) report has shown the world economy is set to strengthen due to accelerated growth in developing countries, as well as high income economies “finally turning a corner” after five years of global financial crisis.

However, we can’t be too carefree and fanciful just yet. The annual report warns that global prospects “remain vulnerable” to rising global interest rates, as well as the potential impact of the withdrawal of economic stimulus in the US. The US Federal Bank has already started “winding down” it’s monthly bond buying programme, previously set to £52 billion a month. The World Bank has warned that some developing countries could be at risk if the decrease in monetary stimulus is accompanied by market volatility.

Banks ‘more willing’ to lend to small businesses 

Already it seems banks are taking a more positive view towards small business lending. Research from the British Banker’s Association (BBA) has found that small businesses are more likely to get loans from the bank than they think. While only one third of SMEs believe they will get a loan approval from the bank, in reality over two thirds actually have their loan approved.

The BBA has this month launched a year-long marketing campaign with the aim of increasing confidence around SME lending, which has the potential to boost the UK economy. The BBA estimate that if all businesses applied for loans when they needed to, 53,000 UK-based small and medium sized businesses would be able to expand.

Growth voucher scheme to help SMEs

In a further push to help small businesses expand, the Government recently launched the Growth Voucher scheme, first announced last march in the 2013 Budget. The program is designed to help small businesses bridge skills gaps by offering £2,000 towards training in finance, taking on employees, leadership and management, marketing or new technology. 

The vouchers are being offered through a dedicated site (https://www.gov.uk/apply-growth-vouchers); to be eligible to apply you must:

- Be a small business (49 employees or less)

- Have been trading for over a year

- Not have paid for business advice in the past three years

- Be independant and registered in England.

You will also need to be able to match the £2,000 with your own funds. You can view the full terms and conditions here (https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/273952/bis-14-539-growth-vouchers-programme-terms-and-conditions.pdf). The increase in small business incentives highlights the government’s recognition that SMEs and startups are integral for the growth of the UK economy.

finance news for startupsUK inflation drops alongside unemployment rates

The Office of National Statistics released figures showing that the Consumer Price Index (CPI) fell in December to 2.0% - a record low since November 2009. The fall in inflation was caused by slower price increases in food, non-alcoholic beverages and recreational services over the festive period.

Unemployment rates are also falling, with the UK economy expected to hit the Bank of England’s previous unemployment threshold of 7% within the first half of the year. The steady decrease in unemployment sparked concerns towards the middle of the month when the EY Item Club released a report urging the Bank of England to keep interest rates at 0.5%, despite the decrease in unemployment. Real-term wages do not currently reflect growth and rising interest rates could choke to British economy.

Mark Carney, the governor for the Bank of England said at a conference in Davos last week that interest rates will remain low in order to sustain the lower unemployment rate and price stability. The EY Club looks to startups and SMEs, as business investment will help shape a more balanced economy.

Small business regulations to be scrapped

SMEs continue to benefit towards the end of this month, as the government takes actions to scrap some of the red tape and bureaucracy currently “congesting and confusing” the system.

3,000 rules and regulations applicable to small businesses are to be scrapped, resulting in over £850m in savings. By March 2015, the Department for Environment, Food and Rural Affairs (DEFRA) are expected to have slashed 80,000 pages of environmental guidance, saving businesses around £100m per year.

The cuts include guidance of cattle movement, hedgerow regulations and waste management rules. This all coincides with a big push from the Federation of Small Businesses in the UK and the Small Business Administration in the US, who have said small businesses, entrepreneurship and innovation are critical to a strong ‘economic game plan’ going forward in today’s developing world.

Cheers Sophie and we look forward to your next roundup in 4 weeks time. If you want more startup and small business themed finance posts then click here for a selection of our top posts. 

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Published on: 1st February 2014

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