SMEs give Darling's Time To Pay scheme the thumbs up

Small businesses welcomed the Chancellor's decision to defer an increase in corporation tax but gave a lukewarm response to other measures.

Alistair Darling said 850,000 small and medium-sized enterprises would benefit as a planned 1% increase in corporation tax is postponed for a second year in 2010-11.

Darling admitted that SMEs "still encounter difficulties" getting bank loans and launched a £500 million Growth Capital Fund in collaboration with banks to invest in small firms.

The Enterprise Finance Guarantee scheme, which gives government backing for bank loans to SMEs, will also be extended, providing guarantees for another £500 million.

But Federation of Small Businesses national chairman John Wright said: "The Government has missed a chance to tackle a difficult credit market by failing to create more options for access to finance, and more competition among High Street banks."

London Chamber of Commerce was more upbeat, saying the Pre-Budget Report may have been "bad for the City but better for small business". Chief executive Colin Stanbridge described the freezing of corporation tax as "encouraging" even though he wanted a cut.

John Brace, managing partner at business advisers Harwood Hutton, warned: "The fact that corporation tax isn't going up won't help if an SME is not making money. The increase in national insurance will more than off-set freezing corporation tax."

Darling also announced that empty commercial properties with a rateable value of less than £18,000 will continue to be exempt from business rates in 2010-11.

The Time To Pay scheme, which has allowed 160,000 businesses to spread the cost of tax payments, is being extended too.

Darling claimed "proportionately twice as many businesses went under" during the Nineties recession.

South-East entrepreneur of the year Sara Murray, who founded insurance website Confused before setting up Buddi, said: "For small businesses like mine, this PBR has very little value in terms of planning or development. It is too little, too late."