What did the Budget 2026 announce for small business finance?

The Chancellor, John Healey, delivered his first Budget on Wednesday 28 October 2026. For a business owner the question is simple. Does any of it make funding easier or cheaper? This report takes the measures that touch small business finance from the Budget 2026 document and the Chancellor’s speech on GOV.UK, and explains what each one means in practice. Smart Funding Solutions is a broker, not a lender. We compare options across the whole market and arrange business finance from £10,000 to £20 million. For the tax measures business owners asked about most, see our updated Budget checklist for business owners.

01What did the Budget do for small business lending?

The headline is money for the two state-backed investors. In his speech the Chancellor announced a further £20.4 billion for the National Wealth Fund and the British Business Bank over the coming years, which the government says will support 140,000 jobs. The Treasury’s Budget announcement says the National Wealth Fund receives £15.4 billion of that, including £2 billion for a new Energy Wealth Fund.

The British Business Bank’s share is set out in a letter from the Chancellor and the Business Secretary published the same day. It confirms a £2 billion funding uplift for the Bank, of which up to £900 million is expected to support defence and dual-use technologies, and asks it to build a new venture debt capability, increase its commercial fund investment and increase its support for Community Development Finance Institutions, the not-for-profit lenders that serve businesses the banks turn down. The Chancellor also said the Bank will double its commitments to women-led businesses and funds to £200 million. The British Business Bank does not lend to businesses directly. It works through the banks and specialist lenders a broker already deals with, so the practical effect is more appetite among those lenders for the deals they back. Our guides to the Growth Guarantee Scheme and the Nations and Regions Investment Funds explain how that money reaches a small business.

02Should I bring forward equipment purchases?

Possibly not. The capital allowance change rewards waiting rather than rushing. The Overview of Tax Legislation and Rates says the main rate first-year allowance rises from 40% to 50% for expenditure incurred on or after 1 January 2027, while the main rate writing-down allowance falls from 14% to 12%. Full expensing for companies buying qualifying plant and machinery is maintained. In plain terms, a business that cannot use full expensing can set half the cost of new main-rate kit against profits in the first year from January, rather than 40% now, with the balance written down more slowly afterwards.

Asset finance lenders have been busy already. The Finance and Leasing Association reported that asset finance new business rose 10% in August 2026, with plant and machinery up 30%. If you are weighing up a purchase, our guides to asset finance and hire purchase versus a bank loan show how the tax treatment differs between buying outright, hire purchase and leasing. Ask your accountant which allowance applies to your purchase before you sign.

03What happens to Corporation Tax and wages?

• Corporation Tax. The main rate stays at 25% and the small profits rate at 19% for the financial year beginning 1 April 2028, according to the Overview of Tax Legislation and Rates.
• Bank surcharge. The Corporation Tax surcharge on banks rises temporarily from 3% to 6% from 1 January 2027 to 31 March 2028. The government expects it to raise £1.5 billion. It applies to the banks, not to their borrowers, though lenders may point to it when pricing.
• Wages. The National Living Wage rises by 3.9% to £13.21 an hour on 1 April 2027. For a business with staff, that is the cost increase to build into next year’s cash flow forecast.
• New ventures. The trading allowance, the amount you can earn from a new venture tax free, triples from £1,000 to £3,000, and a Young Entrepreneurs Allowance will cover a year of living costs for young founders. Our start-up business loans page covers what lenders look for from a business with no trading history.

04What did the Budget say about selling a business?

Two changes for owners planning an exit. The lifetime limit for Business Asset Disposal Relief falls from £1 million to £500,000 for disposals from 6 April 2027, which the Budget document says leaves relief on the full gain for about three quarters of claimants. A new Capital Gains Tax Founders’ Relief, with a 10% rate on lifetime gains of up to £10 million for the founders of the most successful firms, applies to qualifying share disposals from the same date, and is out for consultation. If you are buying rather than selling, the seller’s tax position often shapes the timetable, so our pages on management buyout finance and acquisition finance are worth reading alongside this.

05What did the Budget change for HMRC debts?

The Chancellor gave HMRC extra funding for compliance and new powers to collect overdue tax from those who can afford to pay but ignore repeated contact. The Overview of Tax Legislation and Rates says HMRC will be able to recover established lower-value tax debts through regular deductions from bank accounts from 2029-30, where customers repeatedly fail to engage. Self Assessment Payments on Account are also being reformed from April 2029 so that people pay smaller, more regular amounts rather than two large bills. Neither changes what is due now. If a VAT, PAYE or Corporation Tax bill is already stretching you, the choice is still an HMRC payment plan or a tax loan, and our guide to Time to Pay versus a tax loan compares the two.

06What does the Budget mean for your funding?

The Office for Budget Responsibility now forecasts growth of 1.2% in 2026 and 1.0% in 2027, with inflation peaking at 3.8% in the first quarter of 2027. That points to borrowing costs staying higher for longer, which is a reason to fix the cost of any long-term finance rather than rely on an overdraft. The Budget does not set interest rates and lenders will not change their criteria because of it. What changes is the pipeline. More public money behind the British Business Bank means more guarantee-backed and venture debt capacity flowing to the lenders we search the market with, and a bigger first-year allowance from January makes planned investment cheaper after tax.

The businesses that benefit will be the ones with their numbers ready. Gather your latest accounts and bank statements, check our list of documents lenders ask for, and compare working capital loans or a revolving credit facility for the wage and tax peaks ahead. Get your Instant Quotes to see your lender matches instantly, with no credit check, then a broker searches the wider market for you. Lenders make every decision, and all finance is subject to status.