The government is to waive the planned £65 fee for EU nationals living in the UK who apply for settled status after Brexit.
The move has been welcomed by the Federation of Small Businesses (FSB). "The commitment to abolish the £65 settled status fee will have many EU workers, their families and the small businesses that employ them, breathing a huge sigh of relief," said Mike Cherry, FSB national chairman.
"It is a clear signal that the government recognises the contribution and value that EU workers, from the self-employed to care workers to engineers, provide small businesses and the UK economy. We have been campaigning hard for this and the move will go a long way to easing concerns around a mass skills exodus of EU workers that would only serve to widen already existing skills gaps among small businesses."
However, the FSB is warning that this positive step does not diminish the risk of a "chaotic no-deal Brexit on the 29th of March that would be so damaging for many in the UK's small business community".
Cherry said: "Half of those small businesses that believe they will be impacted by a no-deal Brexit told us that they need at least two months' notice if they are to be adequately prepared. For these businesses, the government has only ten days to give them some sort of reassurance of where we are heading.
"Time is nearly up - we need action now to secure a pro-business deal that delivers the security of a transition period and avoids the chaos of a no-deal Brexit nine weeks from now. All we are being given is more political uncertainty. We are calling on politicians of all stripes to come together to urgently find a way forward from this alarming Brexit stalemate."
The latest FSB Small Business Index (SBI), published this week, shows that UK small business confidence has fallen to -9.9, the lowest level since 2011. Two-thirds (67%) of small firms do not expect their performance to improve this quarter.
The survey found that 58% of SMEs say the domestic economy is a significant barrier to growth, up from 55% last year. Access to skilled staff (36%), lack of consumer demand (29%) and labour costs (21%) are also key barriers to growth.