Britsche KMU-Lobby: Kleine Unternehmen in Verkettung unglücklicher Umstände verwickelt[en] 

What specific issues are SMEs in the UK facing at present? 

With the UK economy in steep decline, small businesses have found themselves at the eye of the perfect storm. Caught between contracting markets, late payments, increasing overheads and a sharp decline in access to finance, many small businesses have failed. 

Are there differences across the regions? 

Recent research carried out by the FSB shows the majority of FSB members, irrespective of location, reporting a drop in trade problems accessing finance and problems with late payments. 

The devolved nature of UK politics has however thrown up a number of differences in the region's response to this recession. In Scotland, for example, the Scottish government has introduced a business rates relief scheme which amongst other things exempts businesses whose premises have a combined rateable vale of under £8,000 from business rates altogether. On top of this, there are discounts available for all firms whose premises have a combined rateable value of under £15,000. A scheme of this nature is not available to small businesses in England or Wales. 

In Northern Ireland, the FSB has welcomed plans by the finance and personnel minister, Nigel Dodds, to introduce automatic rates relief in Northern Ireland within the next financial year. The estimated £8m scheme could be operational by April of 2010 if agreed upon by the necessary bodies. 

What advantages and disadvantages are there in trading in sterling? 

This is really only an issue for those FSB members engaged in the import or export market. For those members involved in exporting, the current week state of the pound will be very advantageous. However, for those involved in importing goods, materials or services, then trading in the pound makes things very expensive. 

What actions has the British government taken to soften the impact of the recession on SMEs? 

We are encouraged by greater dialogue between the government and the small business community. This should form the foundation for a clearer understanding that future economic growth, which will be required to pay for the UK's soaring budget deficit, will be delivered by the millions of small businesses that form the backbone of the UK economy. 

The government has introduced a number of measures to help SMEs. In December 2008, the government reduced the rate of VAT from 17.5% to 15%: we do not believe that this provided the fiscal stimulus it was intended to. When surveyed, 98% of FSB members said that the VAT decrease had had no impact on their business. 

Following pressure from the FSB, the government introduced the Enterprise Finance Guarantee. This £1.3bn scheme will support bank lending, of three months to 10 year maturity, to UK businesses with a turnover of up to £25 million who are currently not easily able to access the finance they need. It will enable them to secure loans of between £1,000 and £1 million through the government guarantee, and is available up to 31 March 2010. 

The guarantee can be used to support new loans, to refinance existing loans where the loan is at risk due to deteriorating quality of security, or to convert an existing overdraft into a loan to release capacity to meet working capital requirements. 

While much of this is welcome news, we believe the government should go further in the help that it gives to the UK's small businesses. 

The European Commission is proposing to update its Late Payments Directive to encourage public authorities to pay contractors within 30 days. Do UK SMEs have difficulty getting paid by public bodies? 

Late payments have become an ever-increasing problem for small businesses in the UK. A recent survey of FSB members suggested that there is £18.6 billion in outstanding payments to the SME sector. The research also showed that almost a fifth of SMEs (19%) now employ a dedicated person to chase late payments and that the average figure owed is £30,000. 

We are pleased with recent efforts made by the UK government in this area. In particular, we welcome moves by national and local government to ensure payments by public bodies are made within 10–20 days. The bigger problem for small businesses in the UK is late payments from other businesses. 

Have you seen any loosening of credit from the banks? 

For small businesses, access to finance and cash flow remain the greatest challenges of this recession. Measures to boost bank lending have so far failed to meet expectations, and too many viable businesses are going bust as a consequence. 

The UK government must clarify confusion over the criteria and access to their Enterprise Finance Guarantee. The FSB believes that this is potentially a good scheme but its implementation has been hampered by poor communication and failure of the banks to pass on the benefits of the scheme. 

The FSB continues to work closely with the banks in an effort to improve understanding of the small business community and to boost lending. However, we believe the government must now look at measures to supplement bank lending and provide alternative sources of finance, banking and investment. 

There has been much talk in Brussels of the European Investment Bank providing loans and guarantees to get credit to SMEs. Are you seeing any signs of this money flowing to companies? 

The short answer is no. More needs to be done to ensure the proposed £4 billion EU rescue package for small businesses reaches the sector. The FSB has proposed that Regional Development Agencies (RDAs) in England and the devolved administrations in Scotland, Wales and Northern Ireland apply for funding from the European Investment Bank (EIB). It has been made clear by the president of the EIB that institutions which do not operate within the banking industry can borrow funds. 

The One North East RDA is embarking on this, but it should be taken up by the other RDAs. The FSB proposes that the government purchases EIB money and makes it accessible to small businesses through RDAs. It has been made clear by the president of the EIB that institutions that do not operate within the banking industry can borrow funds. The precedent has been set for this type of arrangement by the EIB and regional bodies with Castila-La Mancha in Spain receiving €200 million. 

The European Commission is putting a lot of energy into making life easier for SMEs (through the Small Business Act and SME Week etc.) Does any of this make a difference on the ground? 

The last five years have seen a massive shift in the way small businesses are perceived in the EU. The small business community and the contribution it makes are finally being recognised. 

With increased recognition has come a re-evaluation of regulatory burdens on small businesses, and the progress is encouraging. Legislation has been scrapped, proposals shelved and the Small Business Act has been adopted, but we are only at the beginning. Over the next five years, these reforms need to be embedded in everyday working practices, not least because EU economies cannot afford additional layers of regulation during this time of economic crisis. 

Have you any events planned for SME Week? 

SME Week is perfectly timed to coincide with the 2009 European Elections. While the FSB will not be organising any specific SME Week events, we are running a major European election campaign with events held throughout the UK. Our campaign urges European parliamentary candidates to 'think small first'.