New laws to arm small businesses against unfair contracts that stop them raising money from unpaid invoices will be put before Parliament today.
The Government has said that new legislation will make it easier for small businesses to access invoice finance, which will provide a £1bn long-term boost to the economy.
Currently a small supplier’s contract with a larger company may prevent it from securing invoice finance from providers such as banks or other investors.
Under the new proposed laws, any such contractual restrictions entered into after 31 December 2018, with certain exceptions, would have no effect and could be disregarded by small businesses and finance providers, which will help stop larger businesses from abusing their market position.
Commenting, Small Business Minister Kelly Tolhurst said: “The UK’s 5.7 million small businesses are the backbone of our economy and central to our modern Industrial Strategy, with more than 1,000 starting up every day.
“These new laws will give small businesses more access to the finance they need to succeed and will help ensure they have a level playing field from which to set fair contracts with the businesses they supply.”