13 Aug 2012

Funding for small businesses in St Helens may be a reality

UK businesses have suffered from chronic under funding for years. As far back as 1931 a report was produced highlighting that small to medium sized enterprises in the UK were severely underfunded.

Traditional banks have never been keen to invest in small business enterprises certainly not without the assurance of a secured guarantee usually taken on a Directors family home. Furthermore, who has ever met a business banker that actually understands their business, or come to that any kind of business! As a result it would seem that there has been little in the way of assistance for entrepreneurs in the UK for years, For those that do make it off the ground they can look forward to ever increasing tax and excise at every point.

1) Mine Iron Ore

Sell it + VAT

2) Process the Ore

Sell it + Vat

3) Make Pig Iron

Sell it + Vat

4) Make Steel

Sell it + Vat

5) Create steel panels

Sell it + Vat

6) Manufacture Car

Sell it + Vat

Any wonder then that inflation is always climbing? It's acceptable to tax a business when it's established as long as you've assisted it in it's infancy. It's only the same as us raising our kids, paying for their education and their first car but then charging them a few quid "keep" each week once they find employment. That's perfectly acceptable,  Imagine however if we'd have sent them out to work when they were still in nappies and then taken all their earnings.

Back to funding....

The UK is currently the only member of the G8 that does not have a government institution that provides knowledge and funding for small business. All the other members have dedicated organisations that provides funding and guidance for small businesses.  In the UK, the Government and the banks are happy to leave our small enterprises in the gutter.

The USA has a Small Business Administration (SBA), this organisation provided funding for Apple when it was just a fledging small business. That's wise investment!

The USA can often be criticised but they do look after their industry. When our limp wristed officials fell over themselves to sign the Kyoto agreement, the USA administration refused to do so as they were concerned about how it would cripple their industries. That's a caring government, one that considers the consequences.

Past government initiatives have shown promise, but have simply failed before they even got started. The government loan guarantee scheme was a farce from start to finish, in fact one could argue that it was almost a scandal! How many small businesses desperate for help approached their bank for details of that scheme only to be turned away as the bank had little knowledge and no inclination to help them. Instead, despite massive losses and record liquidations the banks dished internal bonuses around like smarties.

Our businesses need and deserve some real help if the UK is going to see any signs of recovery. The opposition have been making noises this week about a similar initiative, a government investment bank. Hopefully this will rattle the powers that be into action. And quick!

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