Small business bank account holders to raise more capital

Thanks to the Government’s adoption of new Euro zone rules improving the access of small firms to equity markets, small business bank account holders in the UK will now be able to raise as much as £4.4 million in venture capital , without having to issue a prospectus.

The European Commission proposed the new limit, which is double the original limit, for 2012.  However, HM Revenue & Customs has decided to adopt the limit a year early, which will also enable firms who are looking for business loans to target a larger investor pool of up to 150.

These new rules, which are predicted to save small firms £12 million annually, were welcomed by the Federation of Small Businesses.  However, industry insiders expressed doubt in regards to the increase in volume of small firms that accessed capital markets, such as the Alternative Investment Market, London’s junior exchange.

Trowers & Hamlins law firm partner, Charles Wilson, remarked that AIM has yet to fully recover.  There are continuing delistings, Mr Wilson said, pointing out that the number of new firms coming to AIM has slowed down considerably, which might make for good ‘mood music’ but is unlikely to lead to a large uptick in listings.

The London Stock Echange’s AIM policy senior manager, Umerah Akram, commented that she too did not have much confidence in the new change’s ability to boost listings, but she welcomed it nevertheless.  What could very well happen, she said, was that aid could come to those who are already listed engaging in fundraising activities.

The immediate impact, she said, will enable firms to conduct further fund-raising efforts from already existent shareholders.

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