Last December, the Government announced a comprehensive SME support package aimed at transforming the business environment.

The initiative addresses critical challenges faced by SMEs and seeks to unlock the potential of underrepresented entrepreneurs, extending the Government’s commitment to fostering small business growth, which began with the establishment of the Small Business Council in March 2024.

If you fall within either of those two categories, here’s what you need to know:

Key developments and legal implications

Fair Payment Code

A key component of this package is the introduction of the Fair Payment Code. This code tackles the pervasive issue of late payments, significantly impacting the cash flow and survival of small businesses.

Research indicates that SMEs are owed an average of £22,000 annually due to late payments. The Fair Payment Code introduces a gold, silver, and bronze system to reward best payment practices and help smaller firms identify reliable partners.

The goal is to ensure that businesses are paid within 30 days, reducing financial strain and fostering a healthier business environment. However, it could involve significant legal implications:

  • Potential contractual changes to align with the new payment standards.
  • Increased scrutiny on payment terms in business agreements.
  • Possible legal recourse for SMEs facing persistent late payments.

SME Support for disabled entrepreneurs

The Government has launched a scheme to support disabled entrepreneurs. Backed by major UK banks, this initiative improves financial access and support for disabled individuals starting their own businesses.

The Disability Finance Code for Entrepreneurship seeks to address inequality and unlock £230 billion in untapped potential by providing disabled entrepreneurs with the resources they need to succeed.

Legal considerations include:

  • Compliance with anti-discrimination laws in lending practices.
  • Potential new regulations to ensure fair access to financial services.

Empowering female entrepreneurs

Recognising the potential of female-led businesses, the Government has partnered with Female Founder Finance and UK Export Finance to offer services at no cost to improve female entrepreneurs’ access to finance and help women grow their business networks.

This initiative aims to ensure that more women can seize opportunities to scale up and achieve their business goals.

This may lead to:

  • New legal frameworks to ensure gender equality in business financing.
  • Potential changes in export regulations to facilitate women-led businesses.

Sector-specific impacts

The government’s SME support package is set to bring a variety of effects across multiple industries, with each facing unique opportunities and challenges:

  • Retail: Enhanced legal protections against retail crime and support for faster payment processes to improve cash flow.
  • Construction: Financial incentives for SME housebuilders will facilitate more projects and potentially expand market opportunities.
  • Labor-intensive sectors: Increased employer NICs from April 2025 may necessitate cost-management strategies in fields like agriculture, hospitality, and healthcare.
  • Manufacturing: Potential access to technology grants aimed at reducing the labour intensity through automation and innovation.
  • Technology and startups: Initiatives supporting underrepresented entrepreneurs could spur innovation and diversify the tech sector.
  • Creative industries: Support for cultural and artistic enterprises may help stabilise income streams and promote sector growth.
  • Education and training: Investments in upskilling programs could enhance productivity and reduce labour dependency.
  • Professional services: Legal changes, like those in the Fair Payment Code, could necessitate contract revisions and compliance checks.

Tackling retail crime

The Government has taken proactive steps to support retail businesses and their staff by addressing retail crime through the establishment of the Retail Crime Forum.

Created by the Home Office, the forum convenes senior law enforcement officials, retail trade associations, and major retailers to devise strategies that combat crime on high streets and enhance the safety of retail workers. Its inaugural meeting took place on December 3 last year.

This effort aligns with the government’s broader commitments, which include introducing a specific offence for assaulting retail workers, ending the effective immunity for theft of goods under £200, and bolstering policing with an additional £7 million in funding over three years.

Inclusivity and business growth

These initiatives underscore the Government’s dedication to nurturing small businesses and fostering diverse entrepreneurial opportunities across the UK.

By addressing issues such as late payments, improving access to finance for underrepresented groups, and tackling retail crime, the government aims to create a more inclusive and thriving business environment, starting at grass roots level with SMEs.

Key takeaways

  • Review and update payment terms in your contracts.
  • Explore new financing opportunities, especially for underrepresented groups.
  • Prepare for potential changes in employment costs due to NIC increases.

Next steps

The government is expected to release its Small Business Strategy in the coming months, which may introduce further legal and regulatory changes.

For detailed guidance or to discuss how these changes might affect your business, please schedule a consultation with our corporate and commercial law team at 01206 835 300 or fill out our online contact form.