17 Sep 2018

New measures announced to boost funding for small businesses

New measures announced to boost funding for small businesses

The UK Government has announced new measures to boost funding for small businesses.

The Department for Business, Energy & Industrial Strategy said the changes will make it easier to access invoice finance, providing a £1billion long-term boost to Britain's economy.

The department explained that, currently, a small supplier’s contract with a larger company may prevent it from securing invoice finance from providers such as banks and other investors.

New laws

Under the new laws, any such contractual restrictions entered into after the end of this year would have no effect and could be disregarded by small businesses and finance providers, which will help stop larger businesses from abusing their market position.

Small Business Minister Kelly Tolhurst said: "The UK’s 5.7million small businesses are the backbone of our economy and central to our modern industrial strategy, with more than 1,000 starting up every day.

"These new laws will give small businesses more access to the finance they need to succeed and will help ensure they have a level playing field from which to set fair contracts with the businesses they supply.


"The proposed laws come as a number of larger businesses stop their suppliers from assigning ‘receivables’ – the right to receive the proceeds from an invoice. This assignment is essential for invoice finance to operate.

"Restrictive contract terms are often used by larger businesses to maintain a hold over their suppliers, with small suppliers often unable to negotiate changes to the proposed contract because they do not have enough power in the marketplace."

Invoice finance allows a business to raise funds by assigning their right to be paid to a finance provider in exchange for funds, typically representing 80% of the value of the invoices. The initial advance is received within a few days and the balancing 20% (less fees and charges) is paid when the customer settles the invoice. 

The new regulations will apply to SME suppliers, but there will be exceptions such as contracts for financial services, contracts with consumers and contracts connected with the sale of a business.

How we can help your business

Knowing how the land lies comes with experience - and our corporate lawyers have been supporting businesses across Scotland for three decades.

We work with clients across a variety of industries and business sectors to provide a complete legal and business advisory service.

Click here to learn more about our services or fill out our form to get in touch with one of our experts.

Please correct the errors below before submitting your request:

Get in touch

Our dedicated client contact team prefer to receive enquiries through our contact form. We'll endeavour to get back to you within 24 hours or during the course of the next working day.

Tick this box if you wish to receive news and offers from Aberdein Considine. By doing, you indicate your consent to receiving targeted email marketing messages from us. On each occasion that we contact you in the future, you will be given the option to opt-out from receiving such messages. You may also email marketing@acandco.com at any time to opt-out.

The personal information that you provide to us in this form will only ever be used by Aberdein Considine (as the Data Controller) for the following specifically defined purposes:

  • email you content that you have requested from us
  • with your consent, occasionally email you with targeted information regarding our service offerings
  • continually honour any opt-out request you submit in the future
  • comply with any of our legal and/or regulatory obligations