March 15, 2012
Ahead of next week's Budget Policy Exchange has today published a research note which looks at ways to improve financing for start-up and high-growth potential businesses.
Supported by the BVCA, 'Financing Innovation: Supporting early stage, aspirational and growing businesses' calls on policymakers to shift focus away from bank lending and concentrate on other measures to encourage investment in digital and high-tech companies.
To this end it makes three proposals:
1. Simplify the tax regime for new businesses to enable them to bypass the current complexity on charges, reliefs, rates and exemptions;
2. Modernise the Individual Savings Account (ISA) regime by creating a new class of ISA tax relief specifically for investment in retail bonds;
3. Government to back a fund, led by the private sector, providing small start-up loans on commercial terms to young entrepreneurs who would otherwise struggle to obtain finance, and in return receive a small equity stake in their business.
The report can be found here on the Policy Exchange website
Welcoming the note, Mark Florman, Chief Executive of the BVCA, said:
"Politicians have spent much energy in recent months stressing the importance of small businesses in driving innovation and job creation, and rightly so. But they also talk too much about increasing bank lending to this community. The reality is that many of these businesses are pre-revenue and not suitable for a loan from a high street bank - it is time to move the debate on. Echoing the sentiments expressed by the BVCA in its Budget submission on the importance of incentivising entrepreneurship and investment, this report from Policy Exchange makes a number of very interesting proposals that are certainly worthy of consideration by HMT ahead of the Budget."
Chris Yiu, author of the report, said:
"A three year flat tax would give start-ups a more predictable and stable future, giving business owners one less thing to worry about and more time to really focus on running and growing their business. A privately run Enterprise Kickoff Fund would give thousands of young entrepreneurs access to the few thousand pounds they need to bring their idea to life."
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Notes to editors:
The British Private Equity and Venture Capital Association (BVCA) is the industry body for the UK private equity and venture capital industry. The BVCA has over 450 member firms, representing the overwhelming number of UK-based private equity and venture capital firms and their advisers.
To read the BVCA's Budget 2012 submission, please click here.