SMEs should be taking advantage of

Amid high inflation, high energy costs and climbing interest rates, small and medium-sized enterprises (SMEs) face a mixed economic picture. To help support SMEs during turbulent times, Lombard has revealed the top five government schemes to take advantage of.

While almost half of SMEs remain optimistic about their growth prospects, according to the Federation of Small Businesses, one in seven (14.7%) fear they may have to downsize or even shut down.

The range of challenges on the horizon make it more vital than ever for small businesses to save money where they can. And that's where government grants and support schemes can play their part. However, as Lombard managing director Ian Isaac points out: "The biggest issue is awareness of grant availability – how to access them and what terms apply."

To help SMEs, Lombard has identified five grants and support schemes that could significantly help small businesses in the UK.

1. Full expensing

The 2023 Budget saw the launch of a major tax incentive scheme to encourage businesses to invest in plant and machinery. Known as full expensing, this capital allowance lets companies deduct 100% of qualifying investments from their taxable profits. Running until March 2026, full expensing covers 'main rate' plant and machinery investments, such as office equipment, machines, vehicles other than cars, and construction tools. It means that businesses can effectively write off the cost of their investment all at once, with their taxes falling by up to 25p for each pound invested.

2. Help to Grow: Digital or Management

With the Help to Grow: Digital scheme, SMEs can apply for software discounts worth up to 50%. A range of tools and guidance are also available to support their take-up of digital technology. The management side of the programme offers 12 weeks of learning to help small business leaders upskill. Other benefits include mentoring support and a bespoke business growth plan. The government covers 90% of the costs, leaving £750 to pay.

3. Knowledge Transfer Partnerships

KTPs give businesses the opportunity to team up with academics. Together, they'll gain the know-how and specialist skills to take innovative projects forward. With the help of grant funding, you're able to cover some of the costs of bringing a graduate on board.

Annual support worth £80,000 to £100,000 is generally delivered through a KTP. Micro, small and medium-sized companies can get 67% of their project costs covered.

4. Seed Enterprise Investment Scheme

The SEIS offers a way to raise vital funds at the very beginning of a business journey. It works by giving tax reliefs to new investors when they purchase shares in your firm. Investments worth up to £150,000 can be raised through the scheme. Between 2012/13 and 2020/21, a total of 15,865 companies secured SEIS investments worth around £1.6 billion.

5. Innovate UK

As the name suggests, Innovate UK offers funding to SMEs with pioneering business ideas. This government agency supports the testing and development of fresh innovations. Advanced manufacturing, digital, electronics and advanced computing are among the sectors and technologies it can assist with.

Even with the end of the super deduction scheme on the horizon and tough economic times ahead, the government's Annual Investment Allowance (AIA) has been extended indefinitely and Isaac expects to see more government incentives come to fruition: "I do think there will continue to be incentives provided to businesses to invest and grow, especially where the expenditure supports climate transition."