Recently the Federation of Small Businesses (FSB) warned of a potential threat to SMEs’ growth and productivity that could result from the UK’s decision to leave the EU.
Its research had revealed that 78% of the SMEs it had surveyed, particularly those in the UK’s less economically developed regions, had used business support services including regional and local funding, to help them to grow.
Much of this money, accessed via agencies such as Local Enterprise Partnerships (LEPs) was from EU-funded schemes. This money from the EU’s Local Growth Fund is expected to be exhausted by 2021.
At this point, said Mike Cherry, FSB National Chairman, small businesses across the country will be “staring into a business support black hole”.
The FSB research also found that of those that had applied for such funding 89% had been looking to grow their businesses by 20%.
According to the FSB SMEs accounted for 99.3% of all private sector businesses at the start of 2016 and for 60% of all private sector employment, or more than 15.7 million people.
Although a significant number were sole traders (60%) it is reasonable to suppose that a significant number of them will have ambitions to grow.
could finance providers step into the breach?
Without sources of funding for SME expansion and growth the implications for future UK prosperity and job creation post Brexit are therefore not encouraging.
Of course, at this stage, when negotiations with the EU have barely begun, it is not clear what, if any, plans there might be for alternative funding in the future.
However, given the time it takes to set up such mechanisms perhaps finance providers should start looking at opportunities there may be for them to diversify and contribute to growth funding to fill the gap.
Could there be an opportunity for them to not only grow their own businesses but also enable their future SME clients and customers to also grow and develop?