Small Business Act passes into law

Friday 10 April 2015

The government’s Small Business Act has received royal assent, the final formality in the process of transforming a parliamentary bill into law.

This new legislation is expected to be beneficial for small to medium-sized enterprises (SMEs), as it will require ten of the UK’s biggest banks to refer small companies to an online finance platform that can connect them with alternative finance providers. This will make it easier for the smallest businesses to access the funding they need to thrive.

The government has called for expressions of interest from companies that provide these services to help get the platform off the ground, and to make sure that there are plenty of options for SMEs who decide to explore this avenue.

As PrintWeek explains, the organisations covered by the new rules are RBS, Barclays, Lloyds Banking Group, HSBC, Santander, Clydesdale Bank, Yorkshire Bank, Bank of Ireland, Allied Irish Bank and Danske Bank.

The scheme will be administered by the government-owned British Business Bank, and backed by the Department for Business, Innovation and Skills (BIS).

Business minister Matthew Hancock said: "The Small Business Act is the first set of laws specifically to help level the playing field for small business. There really has never been a better time to start and grow a business in the UK."

The legislation also includes other provisions designed to boost the fortunes of SMEs, contractors and the self-employed. For example, the law will also introduce a system of cheque imaging.

This is designed to decrease the time needed for cheques to clear, and increase the customer’s payment options. This measure could also help reduce the impact of late payments, which are a constant problem for small businesses across the UK.

Large companies will be required to be more transparent about their payment policies and systems, in a bid to level the playing field with SMEs, as well as to tackle slow payments.

Sole traders who lease bars and pubs under a tied tenancy agreement will also be able to benefit from the creation of a Pubs Code and Adjudicator, who will be able to regulate the relationship between big breweries and tenant pubs, and ensure that small businesses in this sector are dealt with fairly.

A similar scheme will be put in place for small companies in other industries, in the form of an independent Small Business Appeals Champion. This entity will be responsible for ensuring that the interests of smaller organisations are properly represented in relation to non-economic regulators. The end result should be a complaints and appeals process that takes the needs of SMEs, sole traders and contractors into account.

In a BIS press release, business secretary Vince Cable said: "Small businesses provide jobs for millions of people across the country and are driving the economic recovery. The Small Business Act will create the right environment for small businesses to continue to thrive by giving them greater access to finance to help them innovate and grow, and make it easier for them to export goods and services made in Britain."

In a particular boost for sole traders and contractors, a legal distinction between small and micro businesses will be made, backed by statutory definitions of the two statuses. This will bring the UK into compliance with EU recommendations on the topic, which have already been widely adopted elsewhere in Europe.

By Victoria McDonnell

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