Nextcrowd, an online platform connecting growth businesses with investors and private debt providers, is urging Sir Keir Starmer to clarify Labour’s promises to support businesses if they win the upcoming election on 4 July.

Sacha Bright, CEO of Nextcrowd, highlights the experiences of businesses using the platform to raise funding through private equity and debt investors.

Bright acknowledges the Labour promise of 350 local banking facilities, which will benefit small businesses and individuals hesitant about online banking. However, he stresses that the primary need for growing businesses is debt and equity investment. Early-stage investments can be high-risk, and commercial banks are increasingly reluctant to provide solutions. Government support and manageable interest rates are crucial for maintaining the UK’s leading position in technology start-ups.

SEIS and EIS Schemes Continuity

Nextcrowd is calling on Sir Keir to commit to continuing the existing SEIS and EIS schemes without changes and to introduce tax relief for private investors providing risk debt to early-stage growth businesses if interest rates rise. Bright notes that this year marks 30 years since the EIS schemes were introduced, supporting nearly 60,000 businesses, many of which are now successful in the technology and medical sectors. For investors to continue backing these businesses, certainty about the tax benefits and terms of these schemes is essential.

Interest Rate Stability

Interest rate stability is another key concern. Private debt providers, who take higher risks than banks by supporting early-stage growth businesses, seek interest rates that justify the risk. While market interest rates remain relatively low, the higher rates sought by risk lenders are manageable for many businesses. However, if market rates rise, risk-based rates may become unmanageable for new businesses. Bright suggests that additional incentives, such as tax breaks on interest income, will be necessary for private risk lenders to continue their support without increasing their rates.

Nextcrowd urges all political parties to be specific about their plans to ensure the success of the UK’s growth businesses. With time still available before the election, Nextcrowd calls for clear commitments to protect the success of these businesses.