The Business Enterprise Fund is supporting a new project, Big in Business, to help disadvantaged young people gain valuable skills and experience. It is a joint project with Bradford City Centre Project and will run for 12 weeks from January 9th 2008. The project will educate a group of 12 young people in basic job skills and support them in exploring the possibilities of self-employment.
Bradford Telegraph And Argus
After the turbulence of the markets, the autumn General Election which never happened and a tumultuous party conference season, Alistair Darling’s pre-budget report was never going to be easy.
His pledge to slash the chief rate of corporation tax by 2p in the pound to 28 per cent by next year will have certainly found favour.
However the Chancellor has found himself in the position of coming under fire from both union and business leaders over his proposals, particularly those regarding capital gains tax which some have said will stifle the growth of new businesses.
Mr Darling’s plans mean that all capital gains will be subject to a flat rate charge of 18 per cent, replacing the old sliding scale which varied between ten and 40 per cent.
The move, however, has met with criticism from business leaders.
John Cridland, deputy director-general of the CBI, for example, described it as disappointing’ and warned that it “may lead to a reduction in investment in start-up and growing businesses”.
At a time when Bradford is in the middle of a £21.4 million programme to encourage a new generation of start-up firms, the prospect of increased taxation levels may be alarming to many.
However Steve Waud, Director of the Bradford based Business Enterprise Fund, which lends cash and provides support to small enterprises which might be turned down for a commercial loan, said he did not anticipate the measures having an adverse effect on those considering starting their own enterprise.
“For the vast majority of ordinary Joes like you and I this is not going to affect us unless we are planning to sell the business,” he said.
“I really do not think it will stifle entrepreneurialism or be detrimental to start-up businesses. The only people it will be detrimental to will be serial entrepreneurs who may find they have less money to start the next business when they sell up.”
Bradford accountancy firm Howarth Clarke Whitehill said the abolishment of so called Capital Gains Tax Taper Relief from April had effectively hung up the For Sale’ signs on hundreds of British businesses.
Peter Geldeard, tax partner at the firm, suggested a delay in the move for an additional 12 months would enable business owners who were thinking of selling to take their time with any deals.
“This would help to safeguard the jobs of people employed in those businesses and provide a reasonable window of opportunity to ensure business owners realised the full value of their lifetime’s work.”
His colleague Tim Parr, who is also a committee member with the West Yorkshire Society of Chartered Accountants, echoed his views saying: “Whether this first Pre Budget Report will be judged a success will totally depend on the delivery of the commitments promised by the Chancellor.
“Simplification of the tax system - and indeed an overhaul of much of the legislation currently burdening business - is to be welcomed but the real test will be the speed and actions taken to bring real change. Those changes are vital for maintaining British business and its future in global markets.”
Bradford Chamber’s President, Balbir Panesar, gave a mixed reaction and questioned whether the rises in the transport budget would result in any additional funding for Yorkshire.
He said: “The recent credit crunch and last week’s headlines over inheritance tax has inevitably led to these matters dominating the announcements.
“As such we feel a little disappointed - but not too surprised - that the event didn’t include more measures to either shore up the fortunes of business or take steps to weather the expected economic downturn.”
Yorkshire Bank’s director of economic research, Tom Vosa, speculated that the current state of the economy may mean that interest rate levels are likely to remain static until next Spring.
He said: “Given the strong growth environment already in the UK, it is hard to see how the change in the fiscal stance will encourage the MPC to any early cut in interest rates, we continue to believe that the Committee will wait until May 2008 before easing policy.
£1.4 million loan fund lends Leeds entrepreneurs
a helping hand
A £1.4 million loan fund has been created to help entrepreneurs in some of the most disadvantaged areas of Leeds set up and grow their own businesses. The fund will competitive business loans for individuals and businesses unable to access finance through traditional sources such as banks and building societies.
It has been created by the Leeds LEGI (Local Enterprise Growth Initiative) programme in partnership with the Business Enterprise Fund and Leeds City Credit Union, to encourage enterprise in some of the city’s poorest communities.
Recent research suggests that residents in areas such as Harehills, Beeston, Chapeltown and Gipton face difficulty obtaining loans from the usual high street lenders. As a result many turn to doorstep lenders who charge much higher interest rates, and this could be costing the local economy as much as £9.5 million per year.
Working with Leeds City Credit Union, £1 million of the total loan fund has been allocated to provide help exclusively for start up businesses in disadvantaged areas of the city. The fund will offer loans of up to £5,000 to help entrepreneurs get the first step on the business ladder.
Leeds City Council’s ‘Exclusion to Inclusion’ report interviewed residents from some of the poorest areas in the city and found that 20% of people interviewed would be interested in taking out a business loan but can’t access the high street lenders due to poor credit histories, bankruptcy, or high levels of existing debt.
Over the next three years the credit union is expecting to give over 200 of the new loans to would-be entrepreneurs at a comparatively low interest rate. The loans target people who might normally pay interest rates as high as 300% APR due to poor credit ratings.
Sue Davenport, chief executive of Leeds City Credit Union commented:
“There are many talented people living in these communities who have a real business idea but in the current market have no way of realising their goal. The new loans that we are offering will allow them to break down the first of many barriers to starting their own business.”
The Business Enterprise Fund will also be offering competitive loans in association with the Leeds LEGI programme. The Business Enterprise Fund targets start up and expanding businesses, which are unable to access finance through high street lenders.
With £400,000 dedicated to this project, the Business Enterprise Fund can ensure that all businesses taking out a loan with them will also have access to a business mentor who work with them to develop business management skills. The loans provided by the Business Enterprise Fund start from £5,000.
Stephen Waud, Fund Director at the Business Enterprise Fund commented:
“The scheme is designed to support those businesses who have been unable to secure the funding they need from high street banks. Many businesses fail because they have a fantastic product but poor business management skills and are unable or unaware of how to deal with business issues such as changing markets and increased competition. The mentors help to explain situations and offer practical help in the running of their businesses. This includes book keeping, marketing advice and some legal support”
Both loan schemes are supported financially by the Leeds LEGI programme, but they will be delivered by the Business Enterprise Fund and Leeds City Credit Union.
Leeds has been awarded £15.6 million funding over the next three years to help develop enterprise, create new jobs and boost prosperity in the city’s most disadvantaged communities. By 2010, the programme aims to create over 500 new businesses within areas of greatest disadvantage in Leeds.
Richard Mansell, chair of Leeds LEGI programme board, added:
“The next three years will be an exciting time for Leeds. With the LEGI investment we will be able to make a real and lasting difference to some of the most disadvantaged communities in the city. The projects that we are undertaking are about raising aspirations and providing opportunities that help people to succeed in business through creating a culture of enterprise and entrepreneurship.”
To arrange a consultation with Leeds City Credit Union call 0113 214 5254 and for the Business Enterprise Fund call 01274 207 217.
See the following link http://www.leedsfinancialservices.org.uk/LFSI/news.aspx?NewsID=308&TabID=4&MenuID=1
Soapbox, Yorkshire Business Post 10th July 2007
To read the article http://www.yorkshirepost.co.uk/business-columnists?articleid=3016635
Steve Waud, Director of the £2.5 million Business Enterprise Fund, asks:
Imagine this scenario. The Bank of America, which has a couple of offices around the UK but no High Street presence, decides to invest £200,000 into Chapeltown in Leeds. Now, if you saw a plaque on a wall recording this £200,000 investment, wouldn’t you say ‘That’s odd - what made them do that?’
Well, that’s exactly what I saw in America recently when touring New York State, visiting some of the most disadvantaged communities there. Walking around one of the Puerto Rican sections of the Bronx, I saw a plaque on the wall saying that one of our own UK high street banks (which shall remain nameless), had invested $200,000 locally.
Why? Because in America the banks, along with other corporate organisations, get tax relief if they invest in these communities, under the Community Reinvestment Act (CRA).
Whole areas of the States have been revitalised because of this policy. Credit Unions have been able to get finance to reach out into these communities that the main banks had red lined – or excluded – from getting funding.
The Act has had a tremendous impact since it was introduced in the Seventies. It gives banks and other corporate bodies significant tax breaks when investing in disadvantaged communities – and those communities can use the money as they themselves decide because the funds have to be channelled through accredited CDFIs (Community Development Financial Institutions). It means that large swathes of buildings which were derelict or in the grip of drug barons and gangs have been taken back and restored, people are moving back in, reinvesting in the area, setting up businesses, and generally recreating hope and prosperity.
Here in West and North Yorkshire we have our own very successful CDFI – the Business Enterprise Fund – launched in 2004 by Bradford Chamber, whose Chief Executive, Sandy Needham, joined the study tour in the US with me. Part of the tour took us to Harlem where we saw how the tax boost of the Community Reinvestment Act means that many enterprising new arrivals in the country can access finance to get businesses up and running – and how the rebirth of the area has even persuaded ex-President Bill Clinton to set up office there.
Our visit was inspiring, and I’ve come back with a number of ideas we’re already putting into practice. First and foremost I want to celebrate the entrepreneurs whom we’ve seen struggle against all the odds to make a success of their businesses – we’re planning to throw a big event and have a very special awards ceremony for them. Then I want to set up peer group support for entrepreneurs, and persuade a great many more businesses to give pro bono support to disadvantaged communities. I want to establish a peer mentoring system, and to see a website entrepreneurs can use to get practical advice and showcase their successes.
Perhaps more than all, I want to see our banks and other big institutions having the carrot of tax relief to free up some of their funds for our own most needy communities. In the US, the relief is worth up to 25% of the money invested, spread over five years. For example, an investment of £100,000 would entitle the investor to tax relief worth £5,000 each year for five years.
These tax-led investments are practical, effective, and get results quickly, creating and safeguarding jobs, and helping to reverse downward spirals of under-investment in the communities and areas which need finance most.
Didn't they do well!
A beautiful business in a beautiful place.
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Helping the most vulnerable