Liz Truss elected new Tory leader. Here are 5 things businesses can expect from the new Prime Minister.

5 Sept 2022

The former Foreign Secretary will succeed Boris Johnson as Britain's next prime minister after beating Rishi Sunak, it was announced today. Ex-Prime Minister Borris Johnson will leave Downing Street later this week after a three-year premiership overwhelmingly defined by the failure of his government to handle the Covid-19 pandemic. Below we'll discuss the possible implications for business the new PM might bring as she steps into office.

Liz Truss New PM

Cost of living crisis

The new Prime Minister has outlined her plan to deal with the energy crisis putting in place a £150bn bailout package and capping the household energy bill at £2500 a year for the next two years. Businesses will receive equivalent support under a scheme lasting six months, with ongoing support for vulnerable industries.

Many businesses may find that the rise in energy costs has resulted in their customers extending payment dates as they struggle to meet operational costs or wait to gather the funds to pay for orders. 

Invoice finance is a product businesses can utilise to borrow money based on what their customers owe to their business. It works by using unpaid invoices to represent any sums that will be paid to you, avoiding the usual wait for the payment terms. These can be anything from 14 days to 90 days (or more). Invoice finance ensures you get finance quickly, so you don't have to wait to get paid.

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One of the biggest problems for  SMEs is the rapid rise in inflation, hitting a 40-year high of 10.1% in July. Truss has argued that the Bank of England needs to do more to tackle inflation and that the government should be more rigid on monetary supply and higher interest rates which, despite helping to bring the rate of inflation down, could also discourage consumer spending.

If you as a business are currently struggling with inflation or feel that your business will struggle if cost continues to rise, you might consider getting finance to bridge the gap or to maintain healthy cash flow levels. 

For example, working capital finance is a type of business finance designed to boost the working capital available to a business. Working capital loans are generally, over a short or medium term, designed to raise cash or to go after new opportunities. 

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Despite voting remain in the 2016 referendum, Ms Truss has assured party members that she can "be trusted" with Brexit. In a move the new PM claims as "one of her major achievements in government", the former Foreign Secretary was crucial in getting the Northern Ireland Protocol Bill introduced in June. 

As PM, Truss has promised to scrap or replace EU laws that she deems hold back the economy. She has said she would trigger Article 16 as one of her first acts in power. This move could negatively impact SMEs' trading with Europe if the EU triggers retaliatory action against the UK.

Should such a situation arise, SMEs might find it more manageable and safer to have a bit more working capital at the ready. Whether for tendering contracts or securing your cash flow to pay operational costs, you might need to secure extra funds to see you through the coming months.

Short-term business loans, such as revolving credit facilities, can be accessed quickly and with minimal fuss. They're a simple and credible option that businesses can use at different stages in their life for specific purposes. That's the critical point here — if you know what you need to do in the short run (and how finance can help you reach that goal), a short-term growth loan based on your turnover and revenue could be the right solution.

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Business rates 

Truss has signalled that she would look at reforming business rates and that should she win, she would be planning an emergency mini-budget within her first month, weighing up a cut to these rates (amongst others).

However, suppose your business is already suffering from the business rates tax. In this case, you might consider freeing up some of the capital in your premises, effectively ensuring that the property 'pays for itself through asset refinancing, pledging the property as an 'asset' to secure a loan, with the property then becoming collateral. 

Once the principal amount and any fees and interest are repaid, ownership of the asset is returned free and clear. Buildings, land, unsold stock, plant machinery and equipment can all be used in asset finance. Because the loan is secured by collateral, costs are typically lower than other types of business finance.

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Corporation Tax

Earlier this month, the new Prime Minister pledged not to bring in any new taxes and to scrap a planned rise in corporation tax - set to increase from 19% to 25% in 2023

With January fast approaching, and with it, the taxman, businesses who aren't aware of their funding options will suffer the most. We all know paying off tax bills takes a considerable chunk out of your coffers, and it's never something business owners look forward to. However, it's essential to manage these payments year-on-year (or quarter-on-quarter) whilst maintaining a comfortable level of working capital to keep your business ticking over. A tax loan can help you spread the cost of your obligations to HMRC into affordable monthly payments.

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Next steps: How can Funding Options help?

While the above contains some reassuring news for SMEs, we understand that many businesses might still require funding. 

Funding Options helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options can introduce applicants to several providers based on the applicants' circumstances and creditworthiness, with all quotes subject to status and income.

Our award-winning platform, Funding Cloud(™), accurately and quickly matches businesses with the right lender and finance option for their needs. From unsecured business loans to revolving credit facilities and a merchant cash advance, we work with over 120 lenders offering dozens of lending products. Apply for funding in minutes - our record from application to credit approval is just 20 seconds, and cash in the bank within as little as 18 minutes. 

Apply today to get the funding you need to trade, plan, and grow with confidence.

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Simon Cureton

Chief Executive Officer

Simon has been Chief Executive Officer at Funding Options since 2019, spearheading its transformation into a leading fintech with the launch of its Funding Cloud platform. Simon has over 27 years of experience in financial services, having held senior posts at some of the biggest players in the industry all over the world.

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