UK Budget 2015
- Corporation tax rate falling from 20% to 18% by 2020
- Banks compelled to refer declined customers to alternative finance providers and share information
- Government-backed Business Bank to facilitate up to $20bn of finance by 2019
- $400k annual investment allowance
- Enterprise Zones
US Small Business Administration
Created in 1953 as an independent agency of the federal government, its number one strategic goal is “growing businesses and creating jobs” and its second goal is to “serve as the voice for small business”.
The major tools employed by the SBA are a range of financial assistance programs for small businesses that may have trouble qualifying for a traditional bank loan. The biggest program is the 7(a) Loan Guarantee which guarantees as much as 85 per cent of loans up to $150k and 75 per cent of loans of more than $150k. The maximum loan SBA guarantees is $5m.
Loan terms can last up to 25 years for real estate, up to 10 years for equipment and up to seven years for working capital. The SBA limits the maximum interest rate banks can charge to no more than 2.75 per cent on top of the Prime Rate (currently 3.25 per cent). In addition, the SBA charges a guarantee fee ranging between 2 per cent and 3.75 per cent. So all up a small business would pay between 7.5 per cent and 9.5 per cent.
In 2015 the SBA approved 63,461 7(a) loans for a sum of $23.58b at an average of $371k. The total of all loans guaranteed was $111.769b with a bad debt rate (called charged off) of less than 1 per cent.
We want to ensure Australia is the best place to start and grow a business. The best way to create jobs is to build a strong, prosperous economy that encourages business confidence:
- Accelerated depreciation allowance of $20k (this is just a timing difference in when tax is payable and where do you find the capital anyway?)
- Company tax rate for businesses with up to $2m of turnover will be reduced by 1.5 percentage points to 28.5 per cent
National Innovation and Science Agenda, December 2015
- Tax breaks for angel investors
The government will offer tax incentives for investors in startups including a 20% tax offset based on the amount of their investment capped at A$200,000 per investor, per year. There will also be a 10 year capital gains tax exemption for investments held for three years. This will apply to businesses have expenditure less than $1 million and income less than $200,000 in the previous income year.
- Equity crowdfunding
The government will introduce new laws to enable crowdsourced equity funding of public companies with a turnover and gross assets of less than A$5 million. Investments will be limited to a maximum amount of $10,000 per company, per year.