The UK government has launched a £20 million SME Brexit Support Fund to support small and medium-sized businesses (SMEs) adjust to new customs, rules of origin, and VAT rules when trading with the EU.

British SMEs that trade only with the EU, and are therefore new to exporting and importing processes, can apply for grants of up to £2,000 for each trader to pay for practical support, including training and professional advice, to ensure they can continue to trade effectively with the EU.

To provide small businesses with additional support, the SME Brexit Support Fund will be administered through the pre-existing Customs Grant Scheme and will open for applications in March.  

The fund has been set up to support SMEs while they prepare for the new import controls coming into force from April and July 2021, as set out in the UK government’s Border Operating Model — this introduces new import controls in three stages up to 1 July 2021 to allow traders and hauliers time to adjust to new processes, which means businesses don’t have to complete new import declarations for up to six months, unless they are moving controlled goods.

“The government has listened carefully to the issues raised by the business community through the Brexit Business Taskforce, and that’s why we are bringing forward this financial support to help small businesses adapt to the changes to our trading relationship with the EU,” explained Michael Gove, chancellor of the Duchy of Lancaster.

“This new targeted funding will see small businesses get more of the practical support they need to adjust to the new processes and prepare for further changes as we implement our own import controls in April and July.

“Together, we will seize new opportunities available to a fully independent global trading United Kingdom.”

The announcement of the SME Brexit Support Fund follows a recent business survey for 2021 by the British Chambers of Commerce (BCC) on Brexit, which found that 49% of exporters and 51% of manufacturers surveyed had faced difficulties in adapting to the changes in the trade of goods, following the UK-EU Trade and Cooperation Agreement on 1 January 2021. When asked about the specific difficulties they faced, the most common concerns from respondents included increased administration, costs, delays and confusion about what rules to follow.

Suren Thiru, head of economics at the BCC, expressed its support of the SME Brexit Support Fund. She said: “This is a welcome first step in dealing with some of the major issues that small businesses trading with the EU are facing.

“With their finances already under a significant squeeze, firms, particularly those which export, are inevitably encountering difficulties in adapting to the complexities of the new arrangements.

“It’s now crucial that the grants provide sufficient funds to make a real difference, and the government should stand ready to increase their size if needed.  We will continue working closely with government to make sure this scheme is delivered as quickly, and smoothly as possible for firms still adapting to the new EU trading arrangements and the impact of the pandemic.”

Mike Cherry, national chair of the Federation of Small Businesses (FSB), added: “This announcement is very significant — small businesses, often with few cash reserves, are for the first time facing complex new customs processes, VAT requirements and rules of origin.

“While many have come to FSB for help, we have been asking for proper financial assistance of this scale, so that a cash-strapped small business can afford to buy-in expertise, training and practical support. The new fund will make a significant difference, and we are pleased that ministers have really engaged with us on this and come up with an excellent response.”