Small firms are to get a £350m aid package to help them cope with the financial crisis, ministers have said.
Britain's new business secretary, Lord Mandelson, has promised to help small and medium-sized businesses.
The government pledged to pay its own bills with small businesses within 10 days to ease their cash-flow problems.
"We want to help smaller businesses to plan for the difficult times ahead," he told the House of Commons business select committee.
The Conservatives have urged the government to cut payroll taxes by a penny for firms with fewer than five employees.
Small firms are to get £350m in aid, amid increasing signs the economy has slowed significantly, said ministers.
The government move comes amid increasing signs that the economy has slowed significantly.
Manufacturers' confidence has seen its sharpest fall for 28 years, employers' group the CBI has warned.
Earlier this week, the Ernst & Young Item Club think-tank said the economy had "deteriorated dramatically" in the last three months and was already in recession.
Earlier this week, the Ernst & Young Item Club think-tank said the economy had "deteriorated dramatically" in the last three months and was already in recession.
It predicted falling investment and rising unemployment, and said economic growth would decline by 1% next year before recovering in 2010.
Business aid
The Conservatives have said that a 1p national insurance cut could save a typical small business as much as £600.
Lord Mandelson was questioned by MPs on the Business Select Committee, in his first appearance before them since taking his seat in the cabinet.
He said it was important to ensure those overseas markets remained open for UK business, saying: "We have a very strong productive base in the UK."
"We are on the side of small and medium-sized businesses and understand that they are facing tough times," he said.
As part of its £350m package to help small firms, the government has pledged to pay its own bills within 10 days instead of 30 days.
Announcing the scheme, Skills Secretary John Denham said: "We've got to make sure that small businesses have cash flow."
"So government is bringing forward the payments - to 10 days and that pushes billions of pounds out into small businesses, " he said.
Staff training
The Conservatives have said payroll taxes for firms with fewer than five employees should be cut by a penny - which could save a typical small business up to £600.
They have also said that small businesses should be allowed to defer paying VAT for up to six months.
They have also said that small businesses should be allowed to defer paying VAT for up to six months.
Staff re-training
The government has also announced help for small firms to re-train their staff during the current economic downturn.
Under the government's measures, there will be help for small firms to re-train their staff during the current economic downturn.
The changes would ensure that small companies could access credit and improve productivity, said the skills secretary, John Denham.
Announcing the scheme, Mr Denham said government departments would speed up their own payments of small firms' bills - cutting the delay from from 30 to 10 days.
"We've got to make sure that small businesses have cash flow, so government is bringing forward the payments," he said.
"We're bringing forward that to 10 days and that pushes billions of pounds out into small businesses."
Improving profits
Mr Denham also announced that training systems were being overhauled to cut bureaucracy and delays in training schemes.
This followed research showing that firms which invested in staff training were better equipped to survive a recession.
This followed research showing that firms which invested in staff training were better equipped to survive a recession.
"We want to make sure that small businesses can get short courses for their employees," he said.
"We want to make sure that small businesses can get short courses for their employees," Mr Denham said.
Mr Denham said staff training was "demonstrated to improve profitability and make the company more profitable".
Staff training was "demonstrated to improve profitability and make the company more profitable", he added.
"We think that will help hundreds of thousands of people to get skills which are proved to pay back to the companies they work for," he added
"We think that will help hundreds of thousands of people to get skills which are proved to pay back to the companies they work for," he said.
Most firms employing up to 250 people will be able to take advantage of the training package.
Most firms employing up to 250 people will be able to take advantage of the training package.
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Do you own a business? Will this aid package help you? Send us your comments and experiences using the form below.
Do you own a business? Will this aid package help you? Send us your comments and experiences using the form below.
