UK Small Business

The UK Small Business Finance is provided by the UK financial markets to the small business enterprises to meet their business ends.

The UK Small Business Finance primarily caters to the small businesses who lack a definite track record or collateral to obtain the finances. Again it becomes very risky for the small businesses to raise large volumes of capital . The UK small Business Finance addresses such problems.

The UK small business finance uses the following financing tools:

•  Grants for Research and Development

The grants for the purpose of research and development focuses on the small and medium-sized enterprises. The following types of Grants are available:

1. Grants for Micro Projects: The Micro Projects are development projects which have a life span of a maximum 12 months. Grants of volume 20,000 pounds are available to projects which have an employee strength of 10 employees.
2. Research Projects: Grants up to a maximum limit of 75,000 pounds are available to research projects of employee strength of 50.
3. Development Projects: A maximum grant upto 200,000 pounds is available to the development projects of employee strength of 250.
4. Exceptional projects: These companies involve technological innovation requiring high cost. Such projects are of strategic importance to the technology or industrial sector. The volume of grant is 500,000 pounds and caters to projects of employee strength of 250.

•  Community Investment Tax Relief: Individuals and corporate bodies who invest in Community Development Finance Institutions enjoy the tax reliefs. 5% per annum tax relief on the amount invested in the CDFI is available. Such Tax relief is provided by the Community Investment Tax credit.

•  Early Growth Funds : This type of funding is provided to the nascent industries or developing firms who are not fully equipped to bear the market risks. Funds of upto 100,000 pounds are provided. The funds are a combination of the regional and national funds. A fund manager manages the funds on a purely commercial basis.

•  Late Payment: The government introduced the Late Payment of Commercial Debts Act in 1998. By this Act the small firms have the right to interest for the late pay on commercial debt.

•  Regional Venture Capital Funds: The Regional Venture Capital Funds is another UK small business program whose task is to provide risk capital finance to the of volume 500,000 pounds to the small and medium sized firms. The funds under this program are managed by the venture capital professionals. There are many sectors in which the RVCFs cannot invest and they are land and property development businesses, dealing and investments,accountants and legal services, hotels, nursing and residential care homes, international motor transport, agriculture, forestry and timber production and horticulture.

Certain conditions are necessary for the investment of RVCFs.

Firstly, the businesses applying for such investments must fit the European Union’s definition of small and medium sized firms.

Secondly, the company should not be owned by another company or jointly by several enterprises who satisfy the SME definition.

•  Support for Community Development Finance Institutions: This program is another form of the UK Small Business Finance which are meant for the toddler small business enterprises.

•  Small Firms Loan Guarantee: Many small firms have excellent business plans but unable to materialize them due to the lack of any collateral required to take loans. Such impediments are overcome by government guarantees in times of defaults.

For details on the UK Small Business Finance relevant websites are smallbusiness.co.uk, uksmallbusinessdirectory.co.uk, dti.gov.uk etc.