he Enterprise Investment Scheme Association (EISA) is lobbying the Chancellor to announce some small changes to the Enterprise Investment Scheme (EIS) rules in the forthcoming budget with a view to creating thousands of new jobs in growth businesses, funded by the private sector.
The EIS scheme delivers equity support from private investors, where traditional bank funding is unlikely to be available, to eligible growth businesses in the early stages of their development. Such investors receive both a stake in those businesses and tax advantages as a result of their investment.
The economic uncertainty during the pandemic has resulted in a fall of approximately 30% year on year in the number of businesses being supported, with an impact on the number of jobs being created.
In the recent survey issued by the EISA, 85% of EIS supported businesses reported that the investment they received drove job creation, with over half saying that they doubled the number of employees in their companies as they grew their businesses as a result of the additional funding.
By returning to the volumes of eligible businesses backed in 2019, the EISA estimates that a minimum of 1500 new jobs would be created within a year.
By making two simple changes to the existing EIS rules, Director General of the EISA, Mark Brownridge, says that investor levels would see a recovery with the consequent impact on job creation.
“We are asking the Chancellor to increase the limit for the Seed investment stage from £150,000 to £250,000, and to change the current restrictions on businesses using the EIS and SEIS schemes from “the age of the business” to “the size of the business”. By making these two small changes we believe that a further £340million would be invested by the private sector and based on the number of additional businesses supported increasing their staff by just five each, we estimate that a further 1500 jobs can be created. And that’s just within the first year of investment with a multiplier effect in future years. We strongly encourage the Chancellor to make these changes in the forthcoming budget.”