It has been estimated that UK SMEs account for more than half of employment and national income, so their importance to the economy is significant.
They have advantages over larger businesses in their ability to be agile, flexible and quicker to innovate and, of course, successful SMEs have the potential to develop into the larger businesses of the future.
However, there is one area where SMEs have struggled and that is in obtaining finance for growth.
There are various views on why SMEs struggle to obtain finance, including a very conservative attitude by banks with little appetite for risk, lack of a sufficient track record, being too small to attract investors and lack of sufficient tangible assets to offer as security.

A future growth finance “black hole” after Brexit?

funding black hole in £SterlingAccording to research carried out on behalf of the FSB (Federation of Small Businesses) and published in early May 2017 this is a situation that may get worse after 2020.
The EU has earmarked approximately £3.6 billion for UK regional development funds until 2020.  The money is designed “to help correct regional imbalances” according to an article in
Another key area of SME funding is R&D Tax Credits, these have become a huge source of finance for those businesses that are investing in the future but this money comes from the EU, not UK.
So what will happen once the process of the UK’s leaving the EU is complete? Will a cash strapped UK replace the EU funds?
The independent research company Verve surveyed 1,659 FSB members between 5 – 16 December 2016. FSB also carried out a series of interviews and focus groups with members across the UK.
According to the results: “eight in ten (78%) small firms have sought business support services over the last 12 months. Those in Yorkshire (25%), the North East (22%) and North West (18%) were most likely to submit applications for EU-funded schemes.
Of those that have applied for such schemes, the majority believe EU funding has had a positive impact on their business (68%) and local area (64%).”
These findings prompted FSB National Chairman Mike Cherry to warn that “Small businesses across the country are staring into a business support black hole from 2021.”
He called for the setting up of a single Growth Fund for England to be in place before the negotiations are completed plus funding to support future growth hubs.
K2 Partners has produced a guide to sources of finance, which can be downloaded here

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