Small businesses to benefit according to Pre-Budget Report

Small businesses will welcome the outcome of Alistair Darling’s Pre-Budget Report (PBR) as plans have been put in place by the government to help small business funding. These measures include:

• “Enterprise Finance Guarantee” scheme for bank loans to small businesses will be extended for another 12 months; this guarantees a further £500 million of commercial loans.
  
• “Strategic Investment Fund” to support high-tech projects will be given a £200 million boost.
  
•  “The Time to Pay” scheme will allow firms to spread out tax payments and will be extended for as long as required.
  
• The increase in Corporation tax for small businesses will be deferred, leaving the 2010 tax rate unchanged.

The key areas that may adversely affect small business are: 

• The increase of VAT from 15 – 17.5% in January – which could affect consumer spending.
  
• National Insurance contributions rising by a further 0.5% for all employer, employee and self-employed rates from April 2011.

Director General of the British Chamber of Commerce, David Frost, told the BBC that he's pleased with some of the "micro-measures", such as corporation tax. But he added that the additional National Insurance hike is "terrible" news, and a major new cost for businesses when they can least afford it.

Alistair Darling also announced that the economy will shrink by 4.75% in 2009. However, he predicted that the UK will see an increase of 1 - 1.5% over 2010 and by 3.5% over 2011 - 2012.