A crackdown on late payments that businesses waste time chasing is also being launched as part of the Government’s newly published small business plan.
Business Secretary Jonathan Reynolds said late payments were the “number one issue” raised by small businesses as he and Sir Keir Starmer visited a Swindon co-working space in a former train shed.
The plan also aims to boost access to finance after small businesses said they were struggling to secure loans.
“I don’t want anybody who is willing to take a risk and start a business to feel that their family home might be a risk if that doesn’t go right, so working again with private lenders to give people that reassurance,” Mr Reynolds said.
The Prime Minister said being an entrepreneur in the UK was a matter of putting “your whole self” into it.
“You put your whole self in, you put your whole self in, you put your family in, you put so much into running a business.”
But he said he wanted to make access to business finance easier, after hearing from the owner of a salon business who told him she had faced “astronomical” interest rates when she had first opened her business and looked at a bank loan.
He said: “(We’re) making sure people can access that more easily, more readily, don’t necessarily have to feel that they’ve got to put their equity, their house on the line.”
He said he had been shocked to learn that £11 billion is lost through late payments annually and that it is often big businesses paying late.
Upcoming legislation will introduce maximum payment terms of 60 days.
The small business commissioner will also get new powers to fine large companies persistently paying suppliers late.
The commissioner will also be able to enforce a rule that customers must pay their supplier within 30 days of receiving a valid invoice, unless otherwise agreed, with spot checks to help identify breaches.
The plan will also pump £4 billion of financial support into small business start-ups and growth.
This is set to include £1 billion for new firms, with 69,000 start-up loans and mentoring support over the next four years.
And the British Business Bank will have its financial capacity increased to £25.6 billion.
Andrew Griffith, the Conservative shadow business secretary, said: “Cracking down on late payments will be welcome for small business but will mean nothing for the 218,000 businesses that have closed under Labour.
“The reality for businesses under Labour is a doubling of business rates, a £25 billion jobs tax and a full-on strangulation of employment red tape.
“Only the Conservatives are on the side of the makers and will support businesses across Britain to create jobs and wealth.”
The Lib Dems said the announcement “falls far short” of a proper plan.
Sarah Olney, the Lib Dem business spokesperson, said: “Small businesses are the beating heart of our economy and our local communities, yet they’ve had to suffer through years of chaos under the last Conservative government and are now being badly hit by this Government’s damaging national insurance hike.
“Ministers can’t go on burying their heads in the sand about the huge challenges that SMEs face. We must urgently see a proper plan centred on scrapping the national insurance rise, fixing business rates and cutting sky-high energy bills.”
Mr Reynolds said about half of all businesses in the UK were paying the same or lower national insurance employer contributions.
“But we will always acknowledge there have been some difficult decisions the Government had to make on the public finances.
“That makes it even more important to deliver on these measures that will make a practical difference to save businesses time and money wherever we can.”
Sir Keir said rising business rates were a “real cause of concern” and that his Government was going to stabilise it.
“So, it’s not changing year on year. So, lower it because that’s really important for these small and medium sized businesses,” he told ITV West Country.
