UK Government’s “Small Business Plan” – key takeaways and what this could mean for businesses

On 31 July 2025, the Department for Business & Trade issued their plan for how the Government intends to support SMEs across the UK (the “SBP”). With construction and professional services accounting for 16% and 14% respectively of all SMEs, this is clearly an important topic for the construction and engineering sector.

This plan, which has been developed in collaboration with small to medium businesses, is the first of its kind in over a decade. It promises to improve the operating environment and to help businesses reach their full growth and productivity potential. This comes following recent figures from the Office for National Statistics that “accelerating SME growth by just 1% a year could deliver £320bn to the UK economy by 2030”.

The SBP can be found here. In this article, we delve into some of the key topics it covers and what this might mean for our SME clients across the UK. The SBP is particularly relevant for the construction industry as it seeks to address industry-specific challenges such as late payments, complex regulatory compliance, planning delays, and cash flow issues due to retentions, all of which directly impact on project delivery, profitability, and growth.

Addressing late payment and other business conditions

The Government says it is committed to improving business conditions in the UK (in particular, cashflow, skills and infrastructure) to allow businesses to properly focus on, and invest in, growth. To tackle some of these issues, the SBP has committed to:

1. legislate to tackle late payments (including stricter payment terms, stronger powers for the Small Business Commissioner, mandatory interest on late payments, fines for persistent late payment, options to reform or ban cash retentions and increased scrutiny of large companies’ payment practices). This is critical as late payments are said to be costing the UK economy “almost £11bn per year”. We have discussed the Government’s plans for protecting retentions in our article here.
2. improve public sector payment by introducing spot checks and tightening rules to exclude suppliers who fail to pay promptly.
3. reduce administrative costs of regulation by 25% to save SMEs time and money so they can focus on running successful businesses.
4. simplify corporate reporting requirements to ensure they are commensurate with the business size.
5. encourage the use of ADR to resolve disputes involving SMEs, allowing them to resolve potential legal issues in a less time-consuming and more cost-effective manner.
6. modernise the tax and customs system to make it easier for businesses to navigate their tax affairs (whilst also maintaining important tax relief and incentives for SMEs). The Government’s Corporate Tax Roadmap and HMRC’s Transformation Roadmap provide further information on this.
7. streamline and accelerate planning delivery, addressing the UK’s infrastructure gaps and making it easier for smaller developers to build.
8. support businesses to realise the opportunities of net zero and bring down their energy costs by providing targeted information, advice, and financing to decarbonise, while expanding training in the retrofit and energy efficiency sectors.

Opening up opportunities

The Government says it is committed to removing barriers that prevent SMEs from seizing new opportunities, including by:

1. supporting more firms to innovate by leveraging their Intellectual Property and managing security risks, with targeted guidance and enhanced resources from the IPO and the confidence to grow securely through Security Reviews via Innovate UK. This is important given that the European Patent Office has reported that “SMEs with at least one registered IPR are 21% more likely to experience growth”.
2. introducing a more SME-focused approach to procurement and supporting SMEs to win public sector contracts, with new SME spending targets, a Procurement Education programme and possibly further legislative procurement reform.

Future-proofing business skills

The Government says it is committed to assisting SMEs to harness technological and economic change, upskill leadership, attract the right talent and encourage engagement in innovation by:

1. boosting greater adoption of the latest technologies, guided by their needs – launching digital adoption pilots, partnering with the wider industry to provide support and best practice and expanding the Made Smarter Adoption programme that provides specialist funding and advice. According to Sage, this alone could add £232bn to the UK economy.
2. enhance access to (and investment in) skills and talent through the skills and apprenticeships system, including through £1.2 billion of additional investment per year by 2028-29, engaging with SMEs on accessing apprenticeships and T-Levels, and promoting the Government’s skills offer through the Business Growth Service.

Access to finance

The Government is aiming to tackle funding gaps and reduce barriers to finance, addressing concerns that lenders are generally risk-averse and reluctant to finance SMEs. Without access to finance, many SMEs are unable to source the finance they need to grow. The Government intends to:

1. expand the Start-up Loans programme to offer 69,000 new businesses the chance of finance and mentoring.
2. boost access to finance by increasing the financial capacity of the British Business Bank and committing to the British Business Bank’s Growth Guarantee Scheme for the longer term, which is designed for SMEs looking to invest and grow.
3. expand the capacity of the ENABLE Guarantee scheme to £5 billion, helping lenders to unlock more finance options for SMEs.
4. boost the availability of early-stage equity finance for innovative businesses across the UK with £340 million.
5. work with private lenders on the appropriate use of Personal Guarantees, including a mandatory Code of Conduct for loans issued under the Growth Guarantee Scheme, to ensure their use is fair and transparent (rather than being used as a substitute for proper risk assessment).

What does this mean for small to medium businesses?

The proposals outlined in the SBP seek to address some of the key challenges faced by businesses (particularly in the construction industry) including late payments, retentions, the increasing use of novel technology, complex regulation and planning delays. The proposals seem very positive and importantly recognise that SMEs have an important part to play in the success and growth of the UK economy. The SBP has the potential to be game changing, with a widespread impact on SMEs across the UK, if it fulfils promises to make compliance quicker and easier, improve cash flow, expand access to finance, provide tailored business support, and generally remove barriers to growth – unlocking new opportunities for SMEs across the UK.

We recommend keeping an eye out for further developments following the publication of the SBP. If you would like any assistance with any of the issues raised in the SBP (including advice on payment issues, strengthening payment terms, corporate matters such as corporate reporting, IP issues, navigating and staying ahead of new legislation and reforms, managing risk in procurement and contracts and resolving disputes efficiently), then please do not hesitate to get in touch with the authors or any member of our Contracts and Projects Advisory, Corporate & Commercial, Competition & Procurement or Construction Disputes teams and we would be happy to help.