Budget 2010: Small business boost as rates slashed for a year

The Government will slash business rates for a year and create a £4bn support fund to help small and medium-sized enterprises (SMEs).

Business rates will be cut for one year from October, meaning a tax reduction for 500,000 small firms in England, Chancellor Alistair Darling announced in today's Budget.

A new investment corporation - called UK Finance For Growth - will oversee the Government's £4bn range of support for businesses and help them negotiate the bureaucracy involved.

Darling says he will continue the restructuring of the banks to encourage greater more competition and more lending to SMEs, and has asked the FSA to speed up licensing processes for new banks.

This will involve the launch of a new Small Business Credit Adjudicator with statutory powers to enforce its judgements.

Darling says the adjudicator will work closely with an expanded 'Financial Intermediary Service' to ensure small businesses are treated fairly when applying for loans.

It will also introduce steps to help companies diversify sources of finance to non-bank lending channels.

In another boost, the Government's 'Time to Pay' scheme, designed to help companies with their cash flow during the recession by deferring tax payments for up to six months, will be extended for whole of next parliament.

Darling also says he will increase by 15% the number of government contracts that go to small and medium-sized firms.

The Government will also force state-supported banks Lloyds and RBS to make £94bn in new business loans available, half of which to SMEs.