The chancellor announced a new set of measures that will aid grassroots economy in the recovery effort that includes additional lending for SMEs that totals up to around £45 billion.
The funding will come from the state controlled banks Royal Bank of Scotland and Lloyds under the terms of setting a capital growth fund so that firms that are growing fast may eventually increase their worth up to around £500m.
Alistair Darling stated that the measures are central to the new budget plans and ultimately they would help the government better back the finances of the nation. Darling said that the country cannot afford to take growth for granted and need to start acting as a launch-pad to help businesses grow and succeed.
Darling pledged that it would award more contracts to SMEs by 15%, reduce business rates so that 345,000 SMEs will not have to pay, double the threshold for entrepreneur relief up to £2m, and make the annual investment allowance £100,000 which is double its previous rate.
Additionally, the government will support SMEs by creating an appeals process that SMEs can turn to if they feel they have been rejected for credit unfairly.
Small firms for the most part applauded the new announcement and proposals but there was some disapproval shown at the fact that the government will still move forward with the plan to increase the amount that firms need to contribute in towards national insurance. According to the Federation of Small Business, the increase in national insurance could cause redundancies that total around 57,000.