Darling has good news for entrepreneurs

Entrepreneurs and small businesses supplying the public sector got an unexpected boost during the Chancellor's budget with Alistair Darling announcing that the ban on assignment of debt within government contracts will be abolished.

The move was unveiled in the Government's new strategy paper Enterprise: unlocking the UK's talent, which was launched by the Chancellor to coincide with his first budget.

In the past, the ban had meant companies were unable to raise funds against invoices relating to public sector contracts. The new proposals, likely to come into force in Spring 2008 can only be great news for entrepreneurs supplying the public sector. From now on, thousands of companies using invoice finance will be able to compete on a level playing field for Government tenders.

The move has followed months of lobbying by Industry body The Asset Based Finance Association ABFA - a body with whom Close Invoice Finance has always been actively involved.

David Thomson, Chief Executive of Close Invoice Finance and a Director of the ABFA said, "At last, the Government has recognised that factoring and invoice discounting products offer a very important source of finance to an ever increasing number of British businesses."

The budget had further good news for SMEs, according to Thomson: "Budget 2008 contained a number of specific measures at helping small and growing firms to access finance."

These measures include:

• A temporary 20 per cent increase in the funds available through the Small Firms Loan Guarantee Scheme;
• Extending eligibility for Small Firms Loan Guarantee scheme to businesses with growth aspirations over five years old;
• Support for mezzanine finance provision through Enterprise Capital Funds (ECFs), and
• A new capital fund for female entrepreneurs

Thomson continues, "All these measures will help businesses fund their expansion especially at a time where many UK firms are exploring alternative routes to fund business operations and foster growth."

Recent research from the CBI shows that the credit crunch is beginning to affect entrepreneurs and smaller business bosses directly. 12% of businesses surveyed claimed to have experienced a shortage in available capital- whether in terms of more stringent lending criteria, higher cost of finance or actual lack of available funds".

But as Thomson explains, "Entrepreneurs are by nature a bullish breed and few are prepared to put their plans on ice without a fight. It's this spirit which the Government seems to be recognising and which is fuelling better understanding and a greater demand for invoice finance among SMEs as they explore new ways to support company expansion plans."

If you'd like to find out more about IDeal or Close's portfolio of invoice discounting and factoring services please visit www.closeinvoice.co.uk or call 0800 220 257 to discuss your requirements.