Number of SMEs applying to raise finance through tax efficient investment scheme jumps 16%
The number of UK businesses looking to raise funds under the Enterprise Investment Scheme (EIS), jumped 16% to 2,718 in 2013/14 from 2,336 the year before, reaching their highest ever level, says Chancery Investment Partners, the provider of tax efficient private equity investments.
The Enterprise Investment Scheme (EIS) is designed to encourage private investment in unquoted companies through generous tax breaks.
Chancery Investment Partners says it is increasingly popular with SMEs looking to fund the next stage of their growth, particularly because of the continued drought of bank funding for SMEs.
Applications by SMEs for funding through EIS has climbed every year since the height of the financial crisis in 2008/9.
Gary Robins, partner at Chancery Investment Partners, said: “EIS is becoming ever more popular among credit-starved SMEs looking to fund the next stage in their growth.”
EIS was radically expanded in 2012, when the Government made it available to larger businesses and dramatically increased the annual fundraising limit for businesses to £5m. There have been over 5,000 applications from SMEs to HMRC since the reforms.
Gary continued: “The new, improved EIS has been a big hit with businesses that would have been too big to use it before. These are well-established, stable businesses that are ready to take their proposition to a bigger audience but who need funding to do that.
“EIS has been vital for these businesses, because the banks have practically withdrawn from lending to them. The big banks have been focusing on reducing their lending and repairing their balance sheets instead.
“EIS is helping to fund exciting business growth, creating new jobs and adding a huge amount of value to UK PLC.”
The latest data from HMRC shows that the amount raised through EIS has increased to £1,017m, the highest level in a decade.
