Changes to Department for Business (DfB) regulations mean that small firms may soon be able to file their financial positions to Companies House and HM Revenue & Customs in one single document.

The DfB said that the trading statement could replace a profit and loss account, and a simplified "statement of position" could be filed in the place of a balance sheet, which would not be required to list variable assets such as stocks.

It is thought that more than 3.5 million self-employed traders and companies employing fewer than ten staff will benefit from the new reporting regulations.

The review has been welcomed by small business owners and their accountants. Clive Lewis, from the Institute of Chartered Accountants in England and Wales, explained, "Initiatives that can reduce the regulatory burden for smaller businesses are especially important in the current climate."

The paper issued by the DfB with the announcement of the new rules, suggested that trade creditors did "not rely on" existing published information, and that personal relationships with those small businesses to which they extended credit were more important.

Chief executive of the Institute of Credit Management, Phillip King, had reservations, however, and said that it is not something that his body's members were particularly keen on.

Changes to the pre-pack administration process have been pushed back, the Insolvency Service has confirmed, with no changes likely to take place before April.

The minister in charge of insolvency, Ed Davey, had previously said that the amendments would be implemented before the end of this year. The changes are set to include giving creditors three days' notice before a company is sold to a connected party or business.

An Insolvency Service spokesman said that they had attempted to consider all opinions in deciding when to put the changes into force.

"Following discussions with stakeholders, amendments are being made to the Statutory Instrument (SI) by our lawyers," he said. "The SI will not be coming into force by the end of this year and we are now aiming for next year."

It is thought likely that they will be brought in in April, which has historically been the favoured month for insolvency-related updates.

Commenting on the news, Stephen Ideh, from the Business Sale Report, said that the delay was not surprising to many business people, who consider pre-pack administrations as very convenient business tools.

"They claim the procedure often helps limit job loss and maintains customer and supplier confidence, which can often be damaged by liquidation or asset sale," said Ideh. "On the other hand many creditors view pre-packs as an easy escape for directors who have failed to meet their repayments and through the pre-pack deal, are now allowed a new lease of life buying the business back with limited liability and reduced company debt owed."

He added, "The question arises as to whether those ultimately responsible for the company's demise are best suited to run the company going forward. In our opinion creditors deserve more time to have a say in the matter."

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This week has seen the official launch of the £2.5 billion Business Growth Fund (BGF), which will provide loans for medium-sized businesses that have been struggling to raise funds since the financial crisis.

HSBC, Standard Chartered, Lloyds, Barclays and Royal Bank of Scotland, have all provided the backing for the BGF, agreeing in the process to increase their lending capacity to small companies. The agreement was hashed out during the recent Operation Merlin talks between representatives of the British financial industry and the Government.

The fund will aid businesses with turnovers of between £10 million and £100 million, providing them with long-term development capital of between £2 million and £10 million. In return for the investment, the fund will take a minority stake in the company and a place on the board.

The chief executive of the BGF, Stephen Welton, said, "This will give businesses the boost they need to create new products and services, sell to new markets and create new jobs.

"Companies of this size have often struggled to secure financing to support their growth plans – too big for start-up funding and too small to tap into larger commercial funding."

The BGF, which is based in Birmingham, currently employs 30 staff and plans to expand by opening offices in Edinburgh and London.

The former chairman of Channel 4 and renowned private equity specialist, Luke Johnson, has said mid-sized businesses in Britain are being stifled by red tape, despite being the “unsung heroes” of the economy.

The businessman accused senior ministers in the Coalition Government – including Business Secretary, Vince Cable – of inhibiting “the pro-enterprise inclinations of Government”, and were not experienced enough in enterprise to be making major judgements.

He said that mid-sized companies – where he had spent most of his career – were the “key engine of the recovery” in the British economy.

“They provide the vast majority of the new jobs created by the private sector in the UK, they are disproportionately innovative in terms of new products and services, they are crucial for the reinvigoration of our economy,” he said, adding that there was a whole range of issues that were standing in their way.

Johnson suggested a number of measures that could be taken to help these businesses, starting with a simplified tax regime and a two-tier employment legislation system. In the long term he said there needed to be a fundamental change of business strategies in order to make building a business easier, rather than the continued development of “pointless bureaucracy”.

The Lloyds Banking Group has received a targeted appeal from the Shadow Minister for Small Business and Enterprise to improve its lending services to small- and medium-sized businesses (SMEs) – particularly those with specific expansion plans.

Chuka Umunna wrote his appeal in a letter to the bank's chief executive, António Horta-Osório, that reached it just before the publication of the bank's strategic review, in which 15,000 job losses have been announced. Mr Umunna said that assurances must be made that any changes made in the review are not made due to cutbacks in "lending, services and support for SMEs".

The job losses, when combined with the 30,000 redundancies previously announced by the company, amount to the largest shedding of jobs carried out by a British bank. The company has sought to assure its workers and customers that the cuts will largely be made in the company's middle management level.

Mr Umunna wrote, "It is very important that, in seeking to make efficiencies, banks like Lloyds do not compromise the lending, service and support given to SMEs since the government expects those businesses to grow the economy and create jobs to make up for the extreme austerity programme they have imposed."

He said that the bank needed to step in to help the small businesses take on board the people who are made redundant in the public sector job losses.

Business secretary, Vince Cable, has heaped pressure on the UK's banks to increase their lending to small- and medium-sized businesses, after threatening them with new taxes on profits, bonuses and balance sheets if they miss lending targets.

Cable was telling MPs on the House of Commons Business and Skills Committee that the Government's Project Merlin deal with the banks was for one year only. He said that if targets were not met by the end of that period, then the banks would not be able to escape facing extra penalties. Larger UK banks have missed their Project Merlin target to lend to £19billion to SMEs in Q1 2011 by £2.2billion.

"It will be a question of the Government saying, 'Sorry, this agreement hasn't worked and we are absolved of any commitment on our part in terms of taxation'," he explained.

He said there would also be extra pressure put on the financial institutions to disclose the mechanisms they use to make sure credit is available to the smaller business sector. He added that the banks' use of the excuse that any shortfall in SME lending was due to lack of demand would not be tolerated: he said that he believed that banks had gone some way to "discourage demand" by charging high prices or showing lack of interest in lending.

Meanwhile the shortage of bank finance has put pressure on businesses to lend money to their customers to allow them to make vital investments.

Recently released data from the Finance & Leasing Association shows that the amount of money provided for vendor finance jumped to £1,171m in this year's first quarter, up from £942m in Q1 2010 – a rise of 24%.

Philip White, the CEO of finance company Syscap commented: “Vendor finance is increasingly seen as the way around the roadblock caused by the reluctance of some banks to lend to SMEs.”

“Vendor finance allows businesses to invest in the new plant, machinery and IT they need without having to go cap in hand to an unsympathetic bank. It allows UK machinery and IT suppliers to unlock the sales that wouldn’t otherwise go ahead.”

“If businesses can’t get the funding to upgrade out of date machinery and IT then the UK economy will become increasingly uncompetitive – so vendor finance is playing a really important role.”

In a survey of IT vendors commissioned recently by Leasing Life, 63% of vendors expect demand for vendor finance to increase in 2011.

Small businesses in the UK have welcomed a decision made by the European Competitiveness Council (ECC) yesterday to advance a move that will reduce the financial reporting and red tape they have to face.

The proposal passed by the ECC states that so-called 'micro-entities' that meet two of three criteria – a balance sheet total under €250,000 (£200,000), net turnover below €500,000, and fewer than ten employees on average over the financial year – will be allowed to prepare and submit skeletal accounts.

The European Parliament will be presented with the draft directive later this year. European Commissioner, Michel Barnier, said that the proposals had the potential to save around €3 billion every year, for 5.2 million small businesses across the member states.

"Today's agreement means in practical terms that the balance sheet and profit and loss accounts for these micro-businesses will be pared down to the key elements only," he said. "Publication of information will be reduced and simplified to balance sheets only and a one-stop shop."

He said he had confidence that the directive would be passed by the parliament, as he said that it struck the perfect balance between the needs for transparency and simple procedures.

The new Experian Insolvency Index has shown a fall in the number of small and medium-sized enterprises (SMEs) in the UK that have collapsed.

The survey demonstrated the improving health of the UK's smaller businesses, with a 0.55 per cent year-on-year fall in the number of companies becoming insolvent. The fall was even greater among the very small businesses, with the number of failures among those employing three to five people falling by 17.04 per cent and among those employing 26 to 50 people falling by 24.59 per cent.

In terms of where business was improving the most, the Midlands and Wales showed the biggest improvements in the failure figures. The declines of 19.07 per cent in the West Midlands and 17.54 per cent in Wales were only topped by the East Midlands where the numbers fell by an astonishing 36.21 per cent.

Experian's business services manager, Max Firth, said, "With business failure rates and financial strength fluctuating across different regions and sectors, it is especially important that any organisation extending credit to or relying on other businesses for goods and services is able to understand the level of risk associated with their commercial partners."

The extraordinarily high prices being achieved in social network flotations are flying in the face of discounted cash flow valuations and raise the question as to whether another tech bubble is imminent.

Just last week, Renren, the Chinese social network with 31 million users, floated on Nasdaq with a valuation of $6.7bn or roughly 80 times its annual sales. In order to justify this valuation using DCF, sales will need to near double next year, then increase by a further 60 per cent, the 40 per cent before settling at around 6 per cent annual growth. That’s a lot of faith in a company’s future performance.

It’s the social networks with very high active user numbers that are achieving the high valuations, irrespective of whether they’re currently or making much profit – or even forecasting significant profits.

LinkedIn has an indicative valuation of $3bn to $3.3bn, which will value the business at 13 times 2010 sales. Not bad for a company that states in its prospectus: “We expect our revenue growth rate to decline and, as our costs increase, we may not be able to generate sufficient revenue to sustain our profitability in the long term.”

Facebook, with its 600 million users, is valued at $65bn or 32 times its 2010 sales.

High-user social networks are being bought partly because of their strategic potential and to prevent competitors from dominating.

Microsoft’s purchase of Skype this week was influenced by its concern that if Google beat them to the purchase, it would quickly strengthen the search giant’s position in the operating systems arena and enterprise market.

The purchase price of $8.5bn is equivalent to 10 times last year’s revenues ($860m) at Skype, which has always struggled to make any money and recording a loss of $7m in 2010. It has to be noted however that Skype’s revenue growth rate has far outstripped Microsoft’s over the past five years.

If Microsoft succeeds in turning Skype into a business-grade offering, it has huge potential customer bases that will lap up the service, either on its own or integrated into Microsoft’s own products. There is much value in the Skype brand, which is often used as a common verb, and its purchase will hardly make a dent in Microsoft’s cash reserves.

Investors might be as well to remember the massive writedowns that occurred with AOL’s purchase of Bebo, bought for $850 million in 2008 and sold for just $10 million in 2010. Or News Corp’s purchase of MySpace for $580m in 2005 – the business is currently up for sale for around $50m.

New figures from an index on business distress has shown that one in four small businesses are concerned about their debt levels, with warnings coming that the next financial quarter could see a rise in administrations and insolvencies.

The quarterly Business Distress Index, published by insolvency trade body R3, showed that the proportion of businesses that were worrying about their debts had increase in the most recent quarter compared to the last, with small businesses showing particular vulnerability.

The greatest concerns centred on bank loans and other finance debts for which companies were liable. Some 43 per cent of the businesses surveyed said these were their biggest problems rising sharply from the 24 per cent measured in September 2010.

A spokeswoman for R3 Eileen Maclean, said that the number of small and medium-sized businesses that were struggling to address their financial predicaments was alarming.

“If these distressed businesses continue along this downward trend they may lose control of their mounting debt, which will push them into insolvency in the coming quarter,” she said.

“These businesses are allowing their debts to manifest instead of being able to pay them off; things aren’t improving for these businesses which are of real concern at a time when monetary and fiscal policy should be benefiting businesses.”

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