The Future of Business Financing

You can see why governments or local councils are so keen to appease big businesses and provide them with incentives to operate in the local area. When major businesses have a presence in an area, they provide jobs, boosting the local economy directly, and they give an area an identity or strength.

Other businesses will see a major firm setting up somewhere new and wonder why they are doing it. If the deal is attractive, they will want the same deal and before you know it, a local economy is booming.

In this regard, a large part of the future of business financing is going to be about incentivising major businesses to set up in an area. In 2016, there has been considerable growth in Ireland thanks to competitive tax breaks for major firms, helping stabilise and improve an economy that has stuttered in recent times. This growth wouldn’t have occurred without tax incentives and breaks, and you can see these being a key factor in where businesses decide to set up.

Big firms aren’t loyal to locations

There is a problem with this approach though and it is why the future of business financing cannot be solely about offering tax breaks of incentives to major firms. This approach means businesses leave one area to come to your area but in time, another area will be keen to boost their economy.

If they are in a position to offer better tax incentives or motivation to businesses, you’ll find that firms are more than happy to shift from where they are now to a more affordable or lucrative location. This can bring business to you at one point but it can also lose business at other times.

Creating an industry led location can work

This means the future of business financing cannot just be about enticing large-scale firms, it has to be about supporting local residents and businesses to foster their own businesses. In the modern day, technological progress is crucial and business financing incentives based at growing small technological firms can create a base that will be located in your area for many years to come.

Small firms are looking to set up a base and when you have a number of firms in your area operating in the same industry, you become recognised as a hub in that sector or industry. Incentivising tax breaks or grants for certain industries can develop an industry that naturally draws employers, employers and even training schools or courses to your area. This is likely to have a much more positive long term impact on an economy than merely chasing big business through aggressive funding or taxation policies.

Ideally, a mixture of attracting big business and creating an environment for small and start-up firms to flourish should be at the heart of the future of business financing..

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