Small businesses across the UK will benefit from the most comprehensive support package in a generation, as the government launches a bold new plan to give small businesses the tools to thrive and drive economic growth as part of its Plan for Change.
Small and medium sized firms employ 60% of the country’s workforce and generate £2.8 trillion in turnover. However, for too long, the odds have been stacked against small businesses.
From tradespeople and shopkeepers to start-up founders and family-run firms, too many work hard but don’t get the backing they deserve – held back by late payments and not getting the financial backing they need within a wider system that hasn’t worked in their favour.
That’s why the Government is taking serious action to back small businesses and give them the tools they need to grow. This builds on the solid foundation of certainty and stability this government has already delivered—through the trade deals we’ve secured, four interest rate cuts, and a long-term industrial and trade strategy that’s helping businesses plan ahead with confidence.
At the heart of the plan is a the most significant package of reforms in a generation to tackle late payments, with plans to introduce the toughest laws on late payments in the G7.
Late payments are one of the biggest barriers to small business growth —causing cashflow problems that stop firms from scaling up and investing in their future. Every day, hardworking businesses close their doors because they aren’t paid on time.
The new laws are set to give stronger powers to the Small Business Commissioner to empower them to wield fines, worth potentially millions of pounds, against the biggest firms who persistently choose to pay their suppliers late.
The Small Business Commissioner will be given new powers to carry out spot checks and enforce a 30-day invoice verification period to speed up resolutions to disputes. The upcoming legislation will also introduce maximum payment terms of 60 days, reducing to 45 days, giving firms certainty they’ll be paid on time.
Audit committees, under the proposals, will also be legally required to scrutinise payment practices at board level, placing greater pressure on large firms to show they’re treating small suppliers fairly backed by mandatory interest charges for those who pay late.
These changes will also save small businesses valuable time, freeing up hours currently spent chasing overdue invoices so they can focus on growing their business instead. Taken together, this will help ensure businesses are paid on time and end the scourge of late payments which costs the UK economy £11bn per year and closes down 38 UK businesses every day.
“From builders and electricians to freelance designers and manufacturers—too many hardworking people are being forced to spend precious hours chasing payments instead of doing what they do best – growing their businesses.
“It’s unfair, it’s exhausting, and it’s holding Britain back. So, our message is clear: it’s time to pay up.
“Through our Small Business Plan, we’re not only tackling the scourge of late payments once and for all, but we’re giving small business owners the backing and stability they need for their business to thrive, driving growth across the country through our Plan for Change.”
“This country is home to some of the brightest entrepreneurs and innovative businesses in the world, and we want to unleash their full potential by giving them back time and money to do what they do best – growing our local economies.
“Our Small Business plan – the first in over a decade – is slashing unnecessary admin costs, making it easier for businesses to set up shop and giving SMEs the financial backing they need.
“This is our Plan for Change in action, putting more money in people’s pockets, boosting local communities and ensuring Britain is a great place to do business and thrive.”
“I want the UK to be the best place in the world to start a business, grow and succeed – and that’s why we’ve taken bold steps today.
“Too many small firms go under each year because they aren’t paid on time – that is completely unacceptable.
“I hear all too often about businesses who just don’t have the cash needed to start up or grow. Today, we’ve announced measures as part of our Plan for Change to tackle all of those issues and beyond. This is the government listening to businesses, working with them, and delivering real change.”
As part of the plan, the government is also tackling another major barrier for small businesses – access to finance. Despite the UK’s world-leading financial services sector, many small firms struggle to secure the funding they need to invest, expand, or even survive.
To address this, the Government is launching a new £4 billion wave of financial support aimed at boosting growth and supporting more small businesses to start up and grow. This includes a £1bn boost for new businesses, with 69,000 Start-Up Loans and mentoring support to inspire the next generation of entrepreneurs and small business owners.
The Government is also going further by delivering a new £3 billion boost to the British Business Bank – raising the total guarantee to £5 billion – to help lenders offer more small business loans through the ‘ENABLE programme’. Under the scheme, the BBB provides a government-backed guarantee to help lenders feel safer when lending to smaller or newer businesses, enabling them to offer better loan terms including with lower interest.
These measures aim to break down long-standing barriers that have made it harder for small businesses to access the funding they need to get off the ground by making finance and loans more accessible, affordable, and fair.
Accelerating SME growth by just 1 percentage point per year, could deliver £320bn to the UK economy by 2030. All of these measures announced today back small businesses to the hilt and build on action already taken by this government to create the conditions for businesses to thrive:
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31.07.2025
