Small business owners should not have to put their homes on the line to get started, the prime minister has said, as the government unveiled a new plan to improve finance access and tackle late payments.

Speaking in Swindon alongside business secretary Jonathan Reynolds, Keir Starmer said entrepreneurs were being held back by high interest rates and limited borrowing options. He said the government was working with private lenders to reduce the need for personal guarantees, including family homes.

“You put your whole self in, your family, your time, everything,” Starmer said. “We want people to have a fair chance to succeed without risking everything they own.”

Under the new plan, late payments from larger firms to small suppliers will be targeted through legislation and stricter enforcement. The government said late payments cost UK businesses £11 billion a year. New rules will introduce a maximum 60-day payment term and give the small business commissioner the power to fine repeat offenders. A 30-day payment requirement will also be enforced through spot checks.

The government said the changes reflected widespread frustration among small businesses. Reynolds called late payments the “number one issue” raised in conversations with firms. “This is about fairness and freeing up time small businesses currently waste chasing money they are owed,” he said.

A further £4 billion of support is also being promised to help businesses launch and grow. This includes £1 billion for start-ups, with 69,000 loans and mentoring support pledged over the next four years. The British Business Bank will see its financial capacity increased to £25.6 billion.

The government said it aimed to stabilise business rates, which Starmer described as a “real cause of concern” for small firms. He told ITV West Country: “We will make the system fairer and more predictable.”

Labour’s approach was welcomed by some business groups, but the opposition parties were quick to criticise the plans. The Conservatives claimed the measures would not help the “218,000 businesses that have already closed under Labour.”

Andrew Griffith, the shadow business secretary, said: “Cracking down on late payments is welcome but meaningless without reversing Labour’s other anti-business policies, including tax hikes and red tape.”

The Liberal Democrats also said the announcement did not go far enough. Business spokesperson Sarah Olney said: “We need a proper plan that includes scrapping the national insurance rise, reforming business rates and tackling energy bills.”

Reynolds said around half of businesses were now paying the same or lower employer national insurance contributions. “We recognise the pressure many are under,” he said, “which is why practical steps like this plan are so important to cut costs and save time.”