Government launches £20m Brexit Support Fund for SMEs

16 February 2021, 08:39 AM
  • The SME Brexit Support Fund is aimed at helping small businesses adapt to changes to trade rules with the EU
Government launches £20m Brexit Support Fund for SMEs

A cash fund for small businesses struggling with new import and export rules post-Brexit has been launched by the government. Michael Gove, chancellor of the Duchy of Lancaster, announced the £20m SME Brexit Support Fund to help businesses adjust to new customs, rules of origin and VAT rules when trading with the EU.

The fund is open to SMEs that trade only with the EU, meaning they are new to the importing and exporting process. Businesses can apply for grants of up to £2,000 to pay for practical support, such as training and professional advice, to ensure they can continue trading effectively to and from Europe.

Andrew Goodacre, CEO of Bira, the British Independent Retailers Association, welcomed the Brexit Support Fund, but he told Speciality Food that more must be done to combat the lasting challenges of Brexit. “It must be realised that this is just a ‘sticking plaster’ and the real problems will continue.

“All week I have heard examples of small retailers being charged duty, unexplained courier charges and forced to pay VAT instead of deferral. All these costs did not exist before and will continue, reducing the viability of businesses and increasing prices for consumers,” he continued. “We are particularly concerned by stories of courier charges which look like profiteering by delivery companies.”

The food and drink sector has been particularly hard hit by new trading rules with the EU, with importers struggling to source products from small, European producers due to the new costs and exporters facing added costs and time-consuming paperwork.

The government’s support fund announcement follows talks with businesses, as well as business organisations and trade associations, including the Federation of Small Businesses (FSB), which is a member of the Brexit Business Taskforce. The group welcomed the announcement, calling the fund “very significant”.

Mike Cherry, national chair at the FSB, said, “Small businesses, often with few cash reserves, are for the first time facing complex new customs processes, VAT requirements and rules of origin.

“The new fund will make a significant difference, and we are pleased that ministers have really engaged with us on this, and come up with an excellent response,” he continued.

In addition to the fund, the government is creating a Seafood Exports Working Group to troubleshoot issues raised by the industry, offering support to businesses moving goods between Britain and Northern Ireland through its Trader Support Service and operating a guarantee scheme aimed at SMEs, which means the government can provide an 80% guarantee on financial support from lenders to help with exporting costs of up to £25m.

“The government has listened carefully to the issues raised by the business community through the Brexit Business Taskforce, and that’s why we are bringing forward this financial support to help small businesses adapt to the changes to our trading relationship with the EU,” Michael Gove said. “This new targeted funding will see small businesses get more of the practical support they need to adjust to the new processes and prepare for further changes as we implement our own import controls in April and July.”

As the food and drink sector faces new challenges from Brexit, the fund provides welcome support – but the industry will look for further measures in the long-term.

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