REGULATIONS on small businesses raising equity finance have been eased by the Government from this week.
Mark Hoban, Financial Secretary to the Treasury, said the measures were being brought in a year earlier than planned to allow companies to access financing more cheaply and effectively.
Small and Medium Enterprises (SMEs) will be able to access up to £4.37m before a prospectus – a costly compliance procedure – is triggered.
Hoban said: “I’m delighted to announce that the UK is taking the lead in Europe by introducing these deregulatory measures early, saving UK SMEs £12m per year.
“Reducing the regulatory burdens faced by business is vital in making the UK the best place in Europe to start, finance and grow a company.
“In order to play their part in the wider economic recovery, small businesses have to be able to access the finance they need – that includes making it easier for such businesses to tap into capital markets.”
The deregulatory amendments to the EU Prospectus Directive became law at the weekend, allowing businesses to take advantage of the measures from yesterday.
John Walker, national chairman, Federation of Small Businesses, said: “We welcome the fact the Government is leading the way in Europe by making it easier for small business to access finance.
“More small firms should look at equity finance as an alternative route to accessing credit, and these simple changes will help firms looking to grow and invest.
“Extending the number of investors and increasing the prospectus value will help more small businesses access equity finance and show there are more options than just going to the bank for credit.
“What’s important is that small businesses are aware of the alternative routes to finance.”