Breaking news: On Monday 20th April, the government announced that £250m was committed towards a new fund of £500m to invest in private companies that can be categorised as high growth. Small and medium-sized companies with a focus on R&D (research and development) were also going to get access to £750m worth of grants and loans. We wait to see how this ties in to EIS.
Gannons is a member of the EIS Association (EISA) has been working with the EISA as it lobbies the Government regarding the extension of the EIS scheme. Given the current climate the need for finance for small businesses has never been greater. EIS is an already established scheme with full infrastructure to gear up to provide that finance.
The suggestions made to the Government by EISA include the following:
- Increase of income tax relief for investors to 60%.
- Removal of the financial health requirement
- A temporary relaxation of EIS rules on convertible loan notes
EIS is decentralised meaning it will not stretch an already overextended central government. The EISA has suggested that by making the changes listed above it will be possible to release funds of upwards of £600 million in a 12-month period.
The current uncertainty of the CV-19 crisis means that it is imperative that the government acts promptly to free up funding for small businesses. At Gannons we know our small business clients are the backbone of the British economy. They are now more vital than ever as lean, smart, small businesses will be able to pivot quickly to provide the commerce needed as the economy opens up.
EISA has surveyed a number of SMEs and the numbers are striking:
- 81% say that Corona virus has affected their fund raising a “lot” or a “great deal”.
- 71% say their business won’t survive 6 months without funding.
- 59% said a relaxation of the EIS rules would lead to a rise in funding.
Without prompt action the risks are huge. SMEs provide 23 million jobs. If the predicted 42% of small firms go bust that could lead to up to 10 million people losing their jobs.