‘I want Black Country folk to take the plunge’ – minister’s challenge to would-be entrepreneurs
Unveiling new measures to crack-down on late payments and increase the start-up loans scheme, Mr Reynolds said small businesses were the bedrock of the Black Country, and it was his ambition to see more of them.
“Your area is a very entrepreneurial one, a great example of businesses for a whole range of sectors succeeding and thriving, so let’s have more of them,” he said.
Mr Reynolds announced an extra £4 billion to provide 69,000 extra business start-up loans, which he hoped would encourage entrepreneurs in the Black Country.
The scheme provides unsecured loans from £500 to £25,000 at a fixed interest rate of six per cent.
He also announced new laws which would require larger businesses to settle their invoices within 60 days – eventually cut to 45 – or face penalties from the small business commissioner.
He said these laws would be the most stringent in the G7 group of industrialised nations.
“I want a reader of yours who might always have wanted to start a business, but maybe been uncertain, to look at the measures we are taking.
“You may be thinking ‘will you get the money’, ‘will you get the environment to do it?’
“I want you to look at this and think ‘these are the things I can do, these are the tools I need to succeed’.”
Mr Reynolds said late payments by large customers caused the collapse of 38 small businesses every day, and costing the UK economy £11 billion in lost productivity.
Mr Reynolds said small businesses wasted significant amounts of time and money chasing money they were owed when they could instead be chasing new business.
He said his proposed new laws would give the small business commissioner sweeping new powers to impose heavy fines for late payments, and also to carry out spot checks on businesses to ensure they were complying with the rules.
“There’s always been among some small-business owners that sometimes big businesses do this to have an advantageous cashflow position,” he said .
“As a business practice that’s not on, people should clearly be paid promptly for the goods and services they supply.”
He said that many small business owners were reluctant to take legal action against major customers because it might prejudice future business arrangements.
“If you’re my major client, there’s that imbalance of power, I’m not going to do that because you’re too important to me.
“So the reason we’ve got new powers for the small business commissioner or for audit committees on big business is we’re trying to create that kind of transparency that changes the culture across the board.”
Mr Reynolds said the rules would apply equally to public sector organisations, which would be expected to lead by example.
“Every government department, every local authority and every government agency will be expected to be meeting these high standards,” he said.
“This is not just a consultation or a nice-to-have from government. This is real legislative action to produce a regime which will make a real difference to small-business owners.”
Mr Reynolds said the Black Country was known for its proliferation of small and medium-sized businesses, and said he hoped the extra loan funding, coupled with the regulations on late payments, would give entrepreneurs the stability and certainty they needed.
“Our Small Business plan – the first in over a decade – is slashing unnecessary admin costs, making it easier for businesses to set up shop and giving SMEs the financial backing they need.
