If Carlsberg did Grants (Beware the Grant Raisers!)

Carlsberg don’t do business grants or loans, but if they did, this is how it would be: They’d give you a call, ask if you fancy some free funding, wait a few days then let you know a big interest-free loan is all yours, no paperwork needed, no need to worry about what purpose it’s for. Just pay them a fee of £500 (and no messy VAT involved), and 24 hours later they deposit £40k in your account. Just pay it back if you can, when you can. Could it really be possible that someone else could do this, in REAL LIFE? Well, check this out…

A long-standing client of mine came across a very similar offer recently. He isn’t a newcomer to business, he’s been a business owner for over 20 years and has accessed a number of funding schemes. But even this seasoned businessman was tempted by the offer.

In the course of searching for funding, he found an organisation calling itself GRANT RAISERS,  and they offered to source funding for his business. How kind. A couple of email exchanges and a phone call was all that was needed, and guess what- he was told that £40,000 had been pre-approved as an interest-free loan, and would be his if only he could pay them a £500 fee.

An invoice arrived- but before paying he did a little online research, prompted because payment was requested to be made to a personal bank account in Thailand, but don’t worry, that’s just “so the Director could sign for it”! Oh dear, now it was sounding too good to be true- and not quite how Carlsberg would do it.

Well guess what he found- The Guardian newspaper had already exposed this as a fraud. See this article (it’s genuine). The scammers had created a very convincing but fraudulent web page, looking like a page of The Guardian’s own website, this endorsed the scheme, persuading needy or greedy business owners to go ahead without worry. Must be OK if The Guardian has checked them out, right?


(oh, in case you’re wondering, of course my client didn’t pay the fee, but he did share his discovery with me)

And who is “Grant Raisers”?- it’s
http://www.grantraisers.co.uk (don’t go there!!)


What does the Autumn Statement (2015) mean for SMALL businesses?

If you own a small business, you’ve probably had many reviews of the Autumn Statement thrust at you through your Inbox, but they’re unlikely to have struck a chord.

So here’s my take from the perspective of the real world of small business- it ignores the strategic, high-finance highlights that have no relevance to us or that don’t have impact until 2025, and concentrates on the smaller more immediate matters, including one that seems to have slipped under the press radar!

First, some good news. Not much publicised but well worth knowing, the Small Business Rate Relief Scheme that was widely expected to be discontinued will carry on for another year. So use it! This isn’t automatic- you might not have to pay your business rates. But you have to apply to your Local Authority to get it, and it can be worth up to £12k a year.

Even more slightly good news… You may have heard about a levy being introduced that will be used to fund Apprenticeships (not quite so good, because scandalously high administration costs of 25% will be stripped off by government). But good because Apprenticeship funding is very useful to small firms. Better because unless your payroll is more that £3m you won’t pay the tax (it doesn’t kick in until 2017 anyway). This decision sends us a signal that Apprenticeships are going to be there for the long-term. So we should use them! You don’t need to allow a College or Training Provider to do the recruitment for you- do it your way (almost certainly better) and introduce an Apprentice to them! Apprenticeships enable you to recruit a new employee, get their formal training funded, and if you wish and they accept it pay a specially low rate of pay. You can even get grant payments of £1,500 for taking people on, for now.

Now slightly bad news- for those companies in the research and development field many InnovateUK grants will become loans. Probably not what you want to hear, but keep a watch via Google and the Innovate UK website.

Finally, I bet you didn’t pick up on this one in any briefings- A sad loss for small firms is the immediate end of the GrowthAccelerator and MAS (Manufacturing Advisory Service) services as a direct result of the spending review. Recently branded under a new “Business Growth Service” badge, these services had been held up as flagships of government support for small business, but are now ditched at a day’s notice without any apparent concern for companies who are in the process of engaging, let alone the staff and finances of the companies who have been delivering the service. In a staggering display of arrogance and absence of any ethical notice period, providers have been instructed to stop taking on more companies. That’s the last thing any of us expected from a Conservative government. I guess and hope that the local impact will be recognised by Local Enterprise Partnerships, and maybe they can fund something similar. How ironic that this job creation initiative will cost hundreds of redundancies across the country. Don’t forget to deduct that from the job creation totals this scheme has already claimed!

Will Small Businesses now be paid their grants on time?

It’s potentially refreshing to hear among the flurry of announcements made by the new Government, that Sajid Javid has said he’s committed to making sure that government contracts and the whole of their supply chains now pay out monies due to businesses on time. In a speech at Bristol he claimed to have “brought in measures requiring all public sector contracts to pay out within 30 days”. But has this been happening in practice? Well, no.

Although we do already have a set of little-used regulations that should have ensured timely payment practices, delays by some government contractors, sub-contractors, Local Authorities and private companies are commonplace. I have personally seen many examples where operators of government-funded schemes withhold payments to companies who have been awarded grants long after the 30 days those companies had planned into their cashflow forecasts. You might expect this in unusual circumstances or as the result of occasional forgivable errors, but no- I see it as a matter of planned, routine practice. Some even get away with applying a MINIMUM time rather than a MAXIMUM time by which they will pay up- I can’t think of a more overt way of flying in the face of the late payment regulations than that!

Bearing in mind that almost all grants are paid as partial reimbursements against costs a business has already been encouraged to pay out, it is quite obvious that this practice causes financial hardship. This is exacerbated in the case of growth companies, where working capital is under pressure as a typical consequence of funding growth- the very objective that many government supported schemes are charged with delivering. Suppliers too (including myself) regularly experience government-funded companies as a matter of policy withholding payment well beyond 30 days.

So, will Javid’s new-found enthusiasm to eliminate this hypocrisy have any practical effect? Will the operators of government-funded business support schemes make it their target to pay out to small growing businesses as quickly as possible rather than as slowly as possible? Let’s see- I for one will certainly be keeping close tabs on how this pans out.

Missing Out on R&D Tax Credits?

Many small firms don’t claim R&D Tax Credits. Many haven’t heard of it. Last year only 7,500 SMEs claimed, averaging £43,000 per claim. But there’s millions more going unclaimed. Many business owners aren’t aware they can reduce their tax bill or get a cash payment through this HMRC Scheme.

If you carry out “R&D activity”, chances are you can claim back more than your actual costs against your Coproration Tax. How much more? More than double! In fact, those nice people allow us to claim 225% (200% last year) of the costs of staff, materials, test/ trial expenses, even software you buy to use in development, against tax. That’s pretty attractive isn’t it?

To be eligible, your R&D activity needs to fit this criteria- it should be incurred on project(s) which seek to overcome technical or scientific uncertainty. There has to be an element of risk- in other words there was no guarantee you would be successful. This usually translates into new product development, or improving existing products or services.

Even on a small scale it’s worth having. For instance, if in June and July 2012 you incurred costs of £10,000 developing a new product, you could reduce your taxable income for this year by £22,500 and boost your profits after tax by up to £6,300. So why wouldn’t you? You can even revise your last 2 years tax returns if you’ve missed a trick.

So if you think you can demonstrate R&D investment, talk to your accountant. Details are at this HMRC webpage, or have a chat with me. There’s more information about funding and subsidies for small firms on PHMC website

Government Continues to Run Scared of Training Fraud

Well, despite plentiful opportunities for DWP to get a grip on run-away rumours, we see again how politics takes priority over transparency and honesty, and fuels speculation of a cover-up.

Everyone with an interest in government funding and welfare-to-work programmes especially will be well aware of long-standing concerns over fraud allegations at major government contractor A4e.  I’m one of those who sees attempts to suppress and sweep such concerns under the carpet as massively damaging to the industry (see my earlier blog ). Much of my work comes from supporting companies in this sector, so I declare a vested interest not in hushing it up, but in getting it out!

As predicted, the government yesterday put their political interests above the need for honesty when their Select Committee decided to keep new whistleblowers evidence private.

This is after A4e had already claimed they had been “cleared of fraud” by DWP and SFA, and despite DWP yesterday confirming that 11 separate investigations were continuing. And Newsnight got their hands on a leaked A4e internal audit, and  police investigations into allegations of fraud at A4e continues with at least seven arrests made… and … what else?

Come on!  This really does not need sweeping under the carpet.

Will Government-Funded Support Ever Be Clean?

Stories of corruption and fraud within government-funded training and support programmes are nothing new. This an inherent training industry phenomema whenever funding is in the equation.

Despite presumably considerable efforts to clean-up and then hush-up bad and illegal practices on the part of government agencies and their contractors, we still hear leakages through the media of more allegations of falsifying beneficiaries signatures, pretending to provide employment, cheating on qualifications “tests”…  Yes, it’s the same old same old. And if eventually the rogues are brought to book, are they held aloft as scoundrels and publicised as a deterrent? Of course not! Quietly does it is the name of the game- you have to look hard to find out who’s been caught out.

Call me old-fashioned, but wouldn’t tough penalties and wide publicity for those who cheat be helpful in discouraging others who may be temptedt? So why is this cheating and swindling allowed to be swept under the carpet?

One reason could be that the responsible government agencies feel they’re an inherent part of the problem! Does political self-preservation and jobsworth mentality take priority over honesty and ethics? Is it more about avoiding embarrassment than assuring value for public money? Civil servants and contract managers shouldn’t go to ground when bad news leaks out- they should be jumping on the opportunity of free publicity and media interest to stamp out malpractice among their contractors and demand the toughest sanctions.

And will the level of fraud and ripping-off reduce? Of course not! The demands of cut-backs require contractors to do more for less, with a lighter-touch contract management… now I wonder what the effect of that will be?

First Signs of Realistic Support from Banks!

Well done RBS Group- I think you’ve managed to make a first small step towards winning back a little confidence from small business owners.

Here’s a government-backed scheme that understands what small firms need right now, and delivers it without complication. If you need to finance growth but struggle to raise the deposit for a loan or would find the repayments tough, how would a 20% grant help? Or if you’re in an Assisted Area, you could add another 15% to that. Not bad eh?

The RGF (Regional Growth Fund), which has previously been open only to major bids of £1m plus, has now found its way into the domain of individual small businesses, and RBS Group have a £70m fund to distribute- they’re going to do this by offering grants of £5k to £500k to businesses that they would otherwise have turned down for loans or Lombard lease purchase schemes. You don’t have to bank with them either. The process sounds simple, tucked away in the bankers’ back offices so SMEs don’t get drawn into the bureaucracy. It won’t slow down a loan or lease purchase application period, which could be a few days to a few weeks.

What are the catches? Not onerous actually. You’ll need to show your growth will create employment– this scheme overall has to create or safeguard just 2,000 jobs for it’s £70m of government cash- that’s one job per £35,000 of grant, so if you worked on one per £20,000 you should sound an attractive proposition.

You’ll need to use the cash to assist the purchase of an asset– so could be property (for your own use, not for development!), machinery, equipment, vehicles (not cars) etc. Someone asked me if they could use it to instal solar panels- and why not, so long as that purchase enabled the recruitment of at least one more employee.

Your finances must be tight enough that RBS would have turned you down under their normal commercial terms- bet that’s not difficult! And be based in England, excluding London and the South-East, with no more than 250 employees.

By the way, all the banks had a chance to run this scheme, and all except RBS/NatWest/Lombard, and a smaller similar programme run by HSBC (only if you bank with them) turned it down. Come on you lot, what else will you offer to get back onto our Christmas card list?

(more about government funding at phmc.co.uk/pages/funding.aspx)