New Finance Scheme For Small Businesses

Jan. 31, 2012 - PRLog -- A new scheme, which has been introduced by the Westminster government, could mean good things for small businesses in terms of finance.

According to a study, the majority of the Scottish economy is made up of SMEs. A definition of an SME is a company that employs fewer than 250 people. This might be anything from a recruitment firm, to an estate agent, pub, restaurant or retail outlet.

Overall, 99% of all Scottish businesses are small and medium sized. Many experts believe that SMEs are the future of the British economy.

The problem is that SMEs have been hit the hardest by the economic problems of the last few years, many have had trouble getting finance and some have had to shut down or lay off staff in order to stay afloat in the difficult economic time.

One issue is with the major restrictions on business finance from banks. This means that many SME businesses decide to seek alternative, and maybe even risky, forms of finance. One business said, “Without finance, I cannot buy new stock and my business is nothing. I can’t even afford my rent payments on the outlet. How can I cope? Times are tough.”
However, in April 2012, the Seed Enterprise Investment Scheme will launch. This Seed Enterprise Investment Scheme is designed to encourage angel investments in newer and small companies.
Craig Vickery who is the head of the Association of Chartered Certified Accountants Scotland commented on the new scheme, "Under SEIS, taxpayers who invest up to £100,000 in a business that is less than two years old, has assets of less than £200,000 and employs less than 25 people, can claim 50% tax relief, irrespective of which rate the investor normally pays tax at.

Added to this, if the investor disposes of an asset in 2012-2013 and then invests the money under SEIS in the same year, any capital gains arising from the disposal will be completely exempt from Capital Gains Tax.

With banks still unwilling to lend at terms that would be attractive to most new businesses, it is good to see long term investments being encouraged. Only time will tell if there are enough people with the available capital to invest in start-ups, but this scheme could certainly be a welcome break for Scottish start-ups, who will be so vital to the economy in the coming years."

Resources:
http://www.unitedkapital.co.uk
http://www.unitedkapital.co.uk/business_finance.html